MSP Pricing Mistakes You Will Make

By Joshua Liberman, President, Net Sciences, ASCII Group Member Since 1996

Even seasoned, 10-year veteran MSPs wrestle with how to price their services. Moreover, no matter how you roll your managed services, whether you either are offering only one plan or have broken your offerings into tiers, you will certainly hit some bumps along the way. Offering only one complete plan tends to make initial client acquisition more difficult, while going with multiple plans can make retention harder down the road. Let’s look in more depth at both options so you can choose the best one for your particular situation. 

The One Size Fits All Plan
There are many proponents of this strategy of pricing, After all, who wouldn’t want to be able to say to every request of every client, “Yes, that is covered” and know that there will never be a dispute over billing from now to eternity. In addition, who wouldn’t want to be able to charge a handsome enough fee to cover every device of every user at every time, all year round? The allure of this single cost is very attractive and, if you are good enough at building the value of your offering before pricing comes up, this is a very sound choice. Another major benefit of this model is it is the simplest possible way to price your services — and simple is easy, and easy sells. 

On the other hand, having only one pricing tier puts pressure on you to demonstrate the value of your offering before pricing is ever discussed. If you fail to connect, you may find yourself in an endless battle of justification and, since you have already left yourself no wiggle room, this can be a very tough fight. Another issue is not every customer needs an XL-sized plan. The simple fact is some businesses really do have lighter weight IT needs than others do, just as some businesses really do only operate Monday through Friday from nine to five and do not have any out-of-hours support needs. So sticking on the one-size-fits-all approach will force you to choose clients with greater needs or, generally, only clients that see more value in your services potentially making client acquisition harder in the short run. 

The Good, The Better And The Best Plans
At the other end of the scale, there are MSPs that offer three plans. Whether called Silver, Gold, and Platinum or Burlap, Cotton, and Silk, this is probably the most common way MSP services are delivered. Of course, you might also offer user or device based pricing (which now means six offerings in total) or even break/fix as well. That means seven offerings and at that point, it is important to remember there is no such thing as a confused buyer, only confused prospects. Another downside is many clients will choose a plan more limited than they should if you do not guide them appropriately. If you fail to do so, you may be treated to frequent discussions about your plan’s coverage, and we all love those conversations. 

On the upside, having tiered offerings means you can tailor them to a wider range of client types and appeal to a broader audience. If you approach a business that tells you they do critical work day and night, six or seven days a week, you will have a top end plan appropriate for them and they have already done the upselling for you. In addition, if you find a smaller, less demanding client with none to five, Monday to Friday needs, you will have a plan for that too. 

Offering options also allows you to address many of these pricing issues, and affords you the opportunity to bring in new customers at a lower price point to start. To make this option work, have few choices, be simple and clearly delineated, and be sure to guide clients to the right plan for them or you may find this makes client retention harder in the end. 

There really is not one single correct way to price your MSP services. Offering a single plan affords you the benefit of simplicity and the ability to avoid “why isn’t that covered” discussions. Offering multiple options allows you to appeal to a broader range of clients and provides you a lower entry point, but can result in difficult discussions when billable services are rendered. So think about how you want to sell and deliver your services, and pick the option that suits you and the clientele you want best.