Cloud and MSP Pricing Techniques That Maximize Margins
No matter how well you design and deliver a managed or cloud service, it won’t make you money – and might even cost you some – if you don’t price it properly. This article delivers proven, actionable advice on how to arrive at the most profitable prices for your service offerings.
Pricing Cloud Computing and Other MRR Services
There are several factors that can affect your pricing methodology for cloud computing and other monthly recurring revenue services. You will need to analyze your business to determine your pricing model depending on factors including, but not limited to:
- Your predominant business model
- The services that comprise your cloud or other MRR offerings
- Your costs to deliver these services Your sales sophistication
- Your efficiencies in delivering these services
The less efficient you are at delivering service, the higher your price points must be to maintain your desired net profitability.
Pricing Factors Pyramid
Determining Your Predominant Business Model
Your predominant business model may influence not only your deliverables and how successful you are at marketing and selling them, but also your target markets, customers, vendors, and overall profitability. If your predominant business model is product-centric, you may be challenged when attempting to sell and deliver cloud or other MRR services, as the achievement of success in a more service-centric model requires unique skill sets centered on effective sales and long-term relationship-building and customer satisfaction techniques.
As an example, it is logical to assume that a product-centric or time and materials – based service provider would have a tougher time selling cloud computing solutions and delivering services as efficiently, effectively, and profitably as would a reseller who has already built an effective managed services practice….