How to Price like a Bionic MSP

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Pricing—the single most important entity that decides whether your business will sink or surf. Set your prices too high and you will lose business to competitors; set them too low, and your business starts to bleed. All and all, pricing is much more complicated than simply calculating the expenses involved and putting up a price tag. Figuring out the value of your services is never easy.

For MSPs, faced with myriad pricing strategies and models, this is indeed the case. However, we noticed some patterns that consistently surface among successful MSPs.

Each year Kaseya conducts an extensive worldwide survey of MSPs to provide visibility into MSP market growth, highlight behaviors and strategies that set the successful MSPs apart from the pack, and uncover the leading technologies most beneficial to MSP customers. Let’s take a peek into the services Bionic MSPs — service providers with greater than 20 percent annual growth in monthly recurring revenue — and more importantly, how they price them.

Services Bionic MSPs Offer

When it comes to services offered, two noteworthy takeaways emerge:

  • The most popular service are offered at close to same rates by  Bionic MSPs and the MSP population as a whole. This is largely attributable to market demand. Connectivity support, RMM, security and network monitoring are bread-and-butter basics for any MSP worth its salt.
  • Then there are the services that differentiate Bionic MSPs from otherwise similar competitors in the marketplace. For example, identity and access management. Only 45 percent of MSPs offer compared to 69 percent of  Bionic MSPs. Or look at intrusion detection and prevention being offered by 64 percent of Bionic MSPs against only 46 percent of MSPs overall.

The wide gap between Bionic MSPs and their peers when it comes to offering these services clearly represents a focused strategy of the Bionic MSPs appealing to a niche market.

Pricing Strategy

Does this drift toward differentiated service offerings indicate an underlying trend in the MSP landscape? When you distinguish yourself from your competitors, and there are no direct substitutes, you are in an elevated position to command greater fees based on the value your services bring on the table. Are the services Bionic MSPs moving into impacting the pricing strategy/model of choice? Are MSPs finally coming to terms with the fact that cost-based pricing is no longer the way to go?

Based pricing on value: Higher-growth MSPs establish clear business value for each offering. Businesses buy on value to their business; price is important but not paramount. So, know your prospect’s business and how you can add value. Price based on the specific value you can deliver to each customer.

This same focus on value supports the higher fees that Bionic MSPs get for, well, mostly everything. The average monthly managed services contract size for one-third of Bionic MSP is $5,000 and above.

Growth Strategy

While there is no single path to success, being caught without a plan is a sure route to stagnation. 74 percent  of Bionic MSPs prefer to grow organically through new service offerings and a mere 10 percent do not have a clear strategy yet. They look for ways to embed themselves more securely with their clients, adding in new value-add services much more often than their peers.

Next Steps

Before pricing any service it’s important to determine the needs of your target market. While the needs of individual target markets vary, all businesses are interested in getting the best value for their investments.

Is your MSP making the right decisions today to get lucky in your business tomorrow?

To learn the secrets of high-performing MSPs download our ebook “How to Transform your Business to Become a Bionic MSP.”

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