Tag Archive - MSP

MSP Pricing Survey – 10 Tips for Higher Growth

The fourth annual Kaseya MSP pricing survey attracted almost 700 responses from MSPs around the world. The 2014 survey 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. We’ve described many of the findings in our series of MSP Pricing Survey blog posts over the past several weeks.

Based on the survey results, other market research, and conversations with leading MSP luminaries and advisors, here is a list of 10 tips for MSPs who would like to grow faster:

  1. Position a small number of service bundles/tiers with increasing levels of capability. SMB customers want more comprehensive services and see strong value in attractively priced bundled managed services.

  2. MSP-Pricing.ig.1
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MSP Pricing Survey – Pricing Managed Services

First Determine Your Target

Before pricing any service it’s important to determine the needs of your target market. Smaller companies have lower revenues in general and are constrained in their ability to fund expensive services. They look for low priced offerings providing basic levels of support. Nevertheless, all businesses are interested in getting the best value for their investments (read largest ROI) and most will favor higher value, versus a lower price, if the value price fits within their budgetary constraints.

If every client wanted the same outcome you’d expect price ranges for more popular managed services to be fairly narrow, but in reality, they’re not. Consider the prices charged by respondents to the 2014 Kaseya MSP Pricing Survey for desktop support – see chart below. The chart shows the average desktop device support and maintenance charge per month achieved by the survey respondents. The results shown compare responses from MSPs who’s monthly recurring revenue (MRR) had grown at greater than 10% per annum to those who grew their MRRs at less than 10%. As you can see the range of prices is quite wide, reflecting the different value perceived by different customer segments in different locations.

Average-desktop-device-support

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MSP Pricing Survey – Clouds Can Be Lucrative!

SMBs Have Adopted Cloud Services

There’s no doubt about it. Cloud services are a tremendous hit with SMB customers. Whether they are running applications in a public cloud or whether they are leveraging private cloud services from a managed or cloud service provider, the great majority of SMBs are increasing their use of cloud services* and MSPs are benefiting.

This trend does represent a double-edged sword. On the one hand, MSP clients may be reducing their needs for managed servers or managed application services such as email because they plan to move applications to a public cloud or software service provider, e.g. migrating from an in-house Exchange server to Exchange Online via Office 365. On the other hand, there is a growing opportunity for MSPs to both assist clients with their migration process as well as to offer related managed services. As time goes on we expect to see a broad range of cloud-related service offering, including:

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MSP Pricing Survey – Service Offerings Expand

MSPs are adding new service capabilities

One of the strongest trends in the managed services market, highlighted by our most recent Pricing Survey, is the increase in the number of different services (or bundled service components) now offered by Kaseya MSP customers. Our 2014 survey asked MSPs to identify which of a series of 17 services they offered. These responses were then compared to those from our 2013 survey which requested input on 11 categories of service. The results are shown in the chart below. The overall response indicates that more MSPs are offering more services. In fact, a greater proportion of MSPs are now offering all of the services we asked about in 2013. In addition, a significant number are offering the newer service capabilities we added.

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MSP Pricing Survey – Increased Hourly Rates

Worldwide Average Standard Hourly Rates Increased from 2013

The overall average standard hourly rates MSPs charge for their engineers and technicians went up by about $10 per hour between 2013 and 2014 according to the results of the last two Kaseya MSP Pricing Surveys. In our 2014 survey we asked about pricing for three tiers of technician support – level 1, level 2, and level 3 – whereas the previous survey simply asked about “average” hourly rates. However, despite various differences in the number and size of respondents between this survey and the previous one, the results were generally consistent. Rates in the United States and Australia were the highest followed by rates in Europe, Canada, New Zealand and South Africa. Hourly rates were lowest in India – see the table later in the post that highlights the differences on a regional basis.

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MSP Pricing Survey – Growth Leaders Sell Value

Strong value pricing trend

The fourth annual Kaseya MSP Customer Pricing Survey was conducted in September and October last year and it attracted almost 700 responses from MSPs around the world. One of the strongest results to come out of the survey is the significant movement towards value-based managed services pricing and away from cost-based or market-based pricing. The chart below contrasts the differences between the 2013 MSP pricing survey results and the more recent responses. the trend towards value-based pricing is clear. The results support the notion that managed services customers are increasingly interested in business value and linking their purchases to key performance indicators (KPIs), such as system availability, or performance levels, or business outcomes.

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MSP Pricing Survey – Sticky Bundles, Higher Fees

Bundling strategy increases value and stickiness

The message is clear, small and medium businesses are very interested in bundled services. A recent newsletter from AMI-Partners, I-Signal*, which reports findings from their research programs, indicates that SMBs are 3 to 4 times more interested in bundled services than in single services. They gain more value from bundled services and are loath to switch service providers unless they can do so without disrupting their existing business. The strong interest in bundled services supports the notion that SMBs are indeed more interested in value than price, despite their insistence to the contrary.

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Kaseya Connect: Come for the Conversations!

Register for Kaseya Connect!

Every year Kaseya holds its premier user conference, Kaseya Connect. If you are a Kaseya customer, you have probably seen the promotions, and are asking yourself, “Should I attend?” As you might expect, the Connect event features all of the right components:

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IAM Profitable: Get Your Piece of the IAM Market

IAM is Profitable

If you’re an MSP or an IT service provider, then you’re involved in a business model that’s always looking to improve its offerings and increase its bottom line. With the global IAM (Identity and Access Management) market increasing at an explosive rate, being able to offer authentication and password management isn’t just a smart move, it’s also a safe move!
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Get Your Head Out of the Tech: A Realistic Look at Cloud Computing

Cloud Inspection

To understand new technologies, one must first get past the misinformation and pierce the veil of hype to see the product as it actually is. As you can see from the graph below, tech hype progresses in a fairly typical cycle. Currently, we’re just passing the peak of inflated expectations and are beginning to see the beginning of negative press. The relatively recent iCloud incident and death of Code Spaces are just the tip of the iceberg which soon will plunge cloud computing into trough of disillusionment, where it will remain until people realize what purpose cloud computing actually serves, climb the slope of enlightenment, and set out across the plateau of productivity. This same process happens with every major technology hitting the market. Video killed the radio star, and internet killed the video star, yet we still have radio stations, and television networks. The media simply hypes everything out of proportion.

In spite of the trend set by the media, many technologists try to provide realistic advice to people before they throw out their old technology in preparation for the new. Cloud computing isn’t going to eliminate the need for older systems. If anything, it will just augment their purpose. In the following post, I will outline five key elements of cloud computing in a way that shows their upsides and downsides.

Hype Cycle

Accessibility: Boon and Bane

If a user is on a business trip, they can access the same resources that they can at work. The simple ability to access resources from anywhere within the same network is a boon, as it removes much of the need for an internal infrastructure. Unfortunately, as was noted by a French Philosopher, British PM, and a man dressed up as a spider, “with great power comes great responsibility.” Accessibility without appropriate restriction is a highly dangerous risk. A cloud-based system on its own cannot know that your users should not be attempting to log in from Elbonia. If your system is made more accessible to your end-users, then it’s also being made more accessible to everyone else.

In a nutshell, IF your access security is well developed, then you can reap the benefits of increased availability, otherwise you’re going to have a bad time.

Maintenance: Can’t Someone Else Do IT?

This entry would have suited a different article entirely, but it works extremely well for the purpose of realistically portraying cloud computing.

There are two ways this scenario typically plays out. Your cloud-based service provider could be amazing — handling updates, resolving issues, and generally fixing everything before you even notice something has gone wrong. If that’s the case, then you’ve reduced the need for the services of your IT department and in-house infrastructure, thus significantly reducing overhead.

Unfortunately, such a result is not guaranteed, and if your provider leaves a lot to be desired, then your experience is going to be less than positive. Rather than staying ahead of new issues as your in-house techs did, your provider may instead do the bare minimum, only completing tasks when they’re specifically told to do so. Micromanagement is expensive, and the potential service outages resulting from poor service can be costlier than maintaining your old in-house IT infrastructure ever was.

In a nutshell, it all comes down to quality of service. If you move to the cloud and your provider is great, then things will run smoothly. If they’re less than stellar, then your experiences will reflect that.

Reliability: Now With More Points of Failure!

The reliability of a system can always be judged by the number of potential points of failure, and the redundancy (or lack thereof) surrounding those points. Cloud computing is very interesting in how it shifts the reliability of a system from hardware functionality, to relying on the availability of services.

Consider the following, if cloud based systems and in-house systems were both types of vehicles, then in-house would be some sort of SUV, while cloud-based would be some type of high-performance car. This means that their relative performance comes down to the presence of a well maintained road (internet connection). If the road is always going to be available, then the high-performance car will outright win; however, the moment they need to go off-road the SUV has a clear advantage.

I explain it this way, because it’s effective at pointing out the shortcoming of the cloud based model. If you have no internet, then you have no access. If you have an in-house infrastructure and the internet goes out, then work can still be done across the internal network. The high-performance cloud-mobile may be significantly less likely to break down, but without the internet providing access it will just sit idle during those periods.

Security: Something Old, Something New…

Security in the cloud is one of those hot-button topics, so let’s keep this as concise as possible. Companies like Code Spaces, which were bankrupted due to poor cloud security practices, provide a generous justification for their systems to be top-of-the-line. This means that cloud services and cloud service providers are often extremely focused on security. At the same time, there is no action without a cause. The reason why they are so security minded, is because they are aware that, in addition to the usual risks an in-house system may encounter, the new features which the cloud is built upon (such as multi-tenancy, shared resources, and availability) open up new vectors for attack which previously could only be theorized. This means that, while the security in the cloud is often quite strong, there are also new weaknesses which can or may circumvent those defenses.

Costs: You Get What You Pay For

In many instances, cloud service providers offer pay-for-usage models of pricing. This means that you pay based on the resources you are using, and the duration of the time they’re in use. In many cases, this is more cost effective than having the same systems in-house. This adaptability and scalability can be great for any business. On the flip-side, consider cloud based infrastructure the same way you would consider leasing a property. It can be more affordable and ideal to lease an office; however, in some cases it’s more cost effective and practical to buy the property. Whether or not you get a good cost-effective deal for your cloud-based infrastructure comes down to planning for your needs.

Whether you’re planning on migrating to the cloud, are remaining in-house, or are deciding on which you would prefer, the first step to building a strong IT infrastructure is finding the right platform to build upon. Kaseya was designed and built with security as the fundamental building block to its core architecture. To learn more: Click Here.

If you’re interested in some ways to protect your cloud-based IT infrastructure: Click Here.

Author Harrison Depner

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