IT and Business Insights for SMB Solution Providers

Simplify Managed Service Sales with Per-Customer Pricing

Charging fixed, all-inclusive rates can set up MSPs for healthier profits and happier customers. By Megan Santosus

MSPS HAVE LONG BASED THEIR RATES on either the number of users each client employs or the number of devices they utilize. Now, however, a third approach has entered the picture: per-customer pricing where clients are charged a single all-inclusive rate for all their support needs.

The premise is to assess each client’s business environment and offer a single price covering the entire infrastructure. Essentially, it’s a way to bundle rather than break down costs on a line-by-line basis, an approach that business owners can either pick apart or find confusing. “A fixed rate works so well because it’s easy to understand,” says Tommy Wald, president of TW TechVentures LLC, an MSP consulting and advisory firm based in Austin, Texas. “Customers have a budget each month, and this takes away a lot of the friction.”

Yuri Aberfeld, CTO of IT Support LA, a Tarzana, Calif.-based MSP, agrees. “The advantage is that the client sees no surprises,” he says. For example, per-user and per-device pricing schemes often limit support to a set number of hours each month, leading business owners who hit those thresholds to feel like they’re being “nickeled and dimed.” A single customer rate avoids that issue, Aberfeld notes.

However, setting one big price without jeopardizing your margins isn’t easy. For one thing, you’ll have to put some limits in your contracts or risk getting taken to the cleaners, according to Bradley Gross, a Weston, Fla.-based attorney whose specialization is representing managed service providers.

“Never give away an all-you-can-eat plan,” he emphasizes. “[Clients] will try to take advantage of you.”

In addition, anyone offering per-customer prices must master the art of gauging costs accurately in advance. “[It] requires an up-front consultation regarding the company’s environment, business goals, and applications,” Aberfeld notes.

Even if you get that initial assessment right, moreover, the costs of supporting individual clients can fluctuate each month. Wald advises MSPs to monitor costs across all accounts on an aggregate basis. Though profits could be lower with one client in any given month, it’s unlikely that customer expenses will increase across the board all at once.

Still, MSPs offering per-customer fees should revisit their prices periodically to ensure margins remain at desired levels. Wald recommends annual incremental increases, while Aberfeld prefers a hybrid approach in which prices are adjusted on a per-user basis once the flat-rate agreement has been initiated. Aberfeld also builds a buffer into his quotes by anticipating future users based on the prospect’s business growth projections.  

Find an adjustment technique that works for you, and per-customer pricing can set you on the path to healthier profits and more satisfied customers.

Image: Pixabay

About the Author

Megan Santosus's picture

Megan Santosus is a Boston-based freelance writer and frequent contributor to The ChannelPro Network.

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