Three recent studies underline how 2015 is shaping up to be a great year for MSPs in the U.S.
SunTrust Banks’ annual Business Pulse Survey showed that 78% of small- and 84% of mid-sized U.S. businesses are prepped for growth this year. In fact, automating business processes and investing in technology and facilities were among the top projects noted to support this growth (especially for smaller companies).
The eighth-annual American Express/CFO Research Global Business and Spending Monitor reported similar U.S. business growth outlooks, with 35% of the U.S. respondents citing insufficient in-house IT staff and expertise to support this growth.
Finally, the CompTIA study, Enabling SMBs with Technology, found that more than two-thirds of companies surveyed have outsourced IT services in the past 12 months, with 90% somewhat or very familiar with the managed service provider concept.
So, how can MSPs best leverage the opportunity created by business growth expectations, an IT staffing crunch, and increased awareness of the value of managed services?
Kaseya’s fourth-annual MSP survey provides some guidelines. This survey attracted almost 700 responses from MSPs around the world, and included questions on a broad set of topics including demographics, growth rates, services offered, pricing strategies, the prices charged for a variety of services, and price revision plans for 2015.
MSPs with an annual growth rate of over 10% consistently did key things differently than their counterparts:
- Based pricing on value: Higher-growth MSPs establish clear business value for each offering. SMBs buy on value to their business; price is important but not paramount. So, know your prospect’s/customer’s business and how you can add value. Price based on the specific value you can deliver to each customer.
- Smaller number of comprehensive service bundles: 72% of higher-growth MSPs offer 2-3 comprehensive service bundles versus 59% of their peers. Position a small number of service bundles/tiers with increasing levels of capability versus pricing each service component separately. SMB customers want more comprehensive services and see strong value in attractively priced bundled managed services.
- Sell high-value advanced services: Higher-growth MSPs consistently differentiate through advanced and specialized services including mobility, Service Level Agreement (SLA) guarantees, and cloud offerings. The technology terrain is quickly shifting, and SMBs are increasingly interested in getting more from their managed service providers than just a promise to respond rapidly to problems. For example, determine how to best assist customers with cloud migration, operations and management. Cloud services will not replace managed services. On the contrary they increase the need for services which support cloud migration and cloud service management.
- Command higher prices: In many ways, this difference could be a result of the other three behaviors. By basing their pricing on value, offering tiered service bundles, and taking the lead with prospects and customers on cloud, mobile and SLA offerings, higher-growth MSPs don’t worry about underpricing. Be competitive but compete on the outcomes and value you can deliver, not on the cost of providing each service component.
MSPs with the highest growth rates are clearly moving away from the per-user/per-device pricing model commonly used by MSPs. Before pricing any service it’s important to determine the needs of your target market. While the needs of individual target markets vary, all businesses are interested in getting the best value for their investments (read largest ROI). Many will favor a higher value, versus a lower price, if the value price fits within their budgetary constraints. For more analysis of the latest MSP Pricing trends, download Kaseya’s fourth-annual MSP survey full report.
*Originally posted on MSPAlliance.
Author: Miguel Lopez