MSP Pricing Survey Reveals Secrets of High-Growth MSPs — Cloud, Rich Service Portfolios Lead the Way

MSP Global Pricing Survey 2017

Proper pricing, service selection, and creating bundles and portfolios are the key to MSP success, the recent Kaseya 2017 MSP pricing Survey of over 900 MSPs revealed. Another winning card to play? The cloud, or course!

Every year Kaseya conducts an extensive survey of MSPs to see what’s happening with their pricing, what services are taking off, and how the overall business and technical landscape is changing. This isn’t just interesting fare; it helps MSPs plan strategically for the future.

The 2017 MSP pricing Survey amplified some of the findings from the prior year, in particular that the cloud is the wave of the future for high-growth MSPs, and these successful service providers tend to offer more services than their lower-growth peers.

Here are some highlights from the latest survey.

The MSP Market Maintains Strong Growth

The need for IT services and SMBs’ desire to adopt the same leading technologies as their larger enterprise brethren is creating healthy demand for what MSPs do. The vast majority of survey respondents reported strong growth last year. Twenty-six percent said their average annual MRR growth over the past three years is over 15 percent, with an additional 18 percent reporting average three-year MRR between 10 percent and 15 percent.

High-Growth MSPs Offer Full Suites of Services

High-growth MSPs are diverging from their lower-growth peers by consistently offering more services across the board – from basic support services to high-end network monitoring. Basically, whenever there is a choice, high-growth MSPs choose to offer more options and more complete service suites.

It’s no longer sufficient for MSPs to offer a minimally viable service for, say, backup and disaster recovery, and consider the service “done.” Instead, the MSPs that are successfully surfing these market changes are the ones introducing complete suites of strategic managed services that help their customers meet their business goals.

Successful MSPs Have Vision, Scale and Confidence

What separates high-growth MSPs from their lower-growth cohort? No survey can definitively answer that question, but this year’s survey results are highly suggestive that high-growth MSPs create a virtuous high-growth cycle leveraging:

  • Clear-sighted evaluation of market requirements.
  • Dedication to creating economies of scale and efficiencies within their operations.
  • Confidence to claim the full value of the services they offer.

High-growth MSPs also continually find ways to free up resources (both monetary and staff) to be able to deliver more services, recognize more revenues, and increase profits. For example, a small MSP may not be able to scale out a 24×7 NOC environment. However, it can still offer this high-value service by engaging an outsourced NOC option.

Another way to scale is to acquire larger clients that bring in higher monthly retainers. Through hardware standardization, efficient remote monitoring capabilities, and advanced automation they can be managed with a level of resources similar to what is allocated to smaller clients. Fifty-five percent of lower-growth MSPs have the largest percentage of their client base consisting of companies with 25 or fewer employees, while only 40 percent of high-growth MSPs do. Overall, high-growth MSPs are almost 60 percent more likely to have the largest percentage of their client base consist of companies with more than 100 employees.

MSPs Grow Through Security Services and the Cloud

In this recent survey, more MSPs selected “Meeting Security Risks” as the most important IT problem or service need their clients will face in 2017. Thirty percent of respondents selected this item – chosen at almost double the rate of the next selected item.

However, three of the items listed touch upon different cloud concerns. When these are added together, cloud concerns virtually tie with the security risk (30.79 percent versus 30.22 percent, respectively).

Graphic: What do you expect to be the top IT problem or service need for your clients in 2017?

MSP Pricing Graph - Total

Taking the High-Growth Road

The 2017 pricing survey gives a snapshot of an inflection point for the MSP market. While most MSPs continue to experience positive growth, there is a significant divergence in progress separating high-growth MSPs and their lower-growth peers. The highest performing MSPs continue to outpace their peers by taking the lead on offering high-value, comprehensive services while also making sure they are fully compensated for the strategic value they deliver to clients.

It’s imperative that MSPs do more than just “check off” a service-offering box to capture the full market potential that is present and will continue to grow within the SMB market. Any MSP that doesn’t continually expand its service offerings, find ways to work more efficiently (either with better staff training or more advanced technology solutions), and better communicate the value it delivers to clients, can rest assured that its competition certainly will.

Want to learn more? Check out the full results of the 2017 MSP Global Pricing Survey.

Posted by Doug Barney
Doug Barney was the founding editor of Redmond Magazine, Redmond Channel Partner, Redmond Developer News and Virtualization Review. Doug also served as Executive Editor of Network World, Editor in Chief of AmigaWorld, and Editor in Chief of Network Computing.
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