Nov 06

MSP Guide: How to Build the Right Offer

Wednesday 06 Nov 2019

The transition from break-fix IT services to managed services comes with a lot of challenges. One of the biggest challenges involves building the right offer that appeals to customers. You should build the MSP offer in such a way that it brings value to your customers and lowers their IT expenses. If you are a new player entering the MSP space, building the right offer is critical in overcoming competition and succeeding in the market.

When you get started as an MSP, you need to determine the right approach for providing your services – à la carte, bundled offering, or a combination of both. You need to pick a packaging strategy based on your specific business goals and aspirations.

This article gives you interesting insights into how you can bundle your products, price them right, and woo your target customers.

To bundle, or not to bundle

According to Kaseya 2017 Global Pricing Survey, 70% of the managed service providers in the market now provide at least one bundled service to their clients. Though there is a general shift towards bundled offerings, many top MSPs have not completely ruled out à la carte offerings.

Bundling helps you streamline your business by standardizing your billing and service operations. Your SMB customers can enjoy a more robust experience as the integration of different products provides great value to them. They can also enjoy cost benefits as packages are typically less expensive than products purchased individually.

In the absence of bundled offers, customers generally do not go for complete solutions that fulfill all their IT needs. For instance, if airbags are sold only as add-ons in cars, some customers may choose to ignore them to cut down their expenses. Similarly, there are SMB customers who do not go for the entire package when the products are sold individually. In many cases, the bare minimum features, they choose, leave them open to unexpected vulnerabilities.

Building the right offer

The packaging strategy opted by MSPs may vary significantly based on their business goals. Some MSPs bundle products based on the industry they serve, while others bundle products based on the IT solutions they provide. The most popular one is the tier pricing model, where they provide different packages based on the budget preference of their clients.

For instance, let’s consider an MSP specializing in RMM having three different packages – basic, advanced, and premium. The company might classify its product tiers as follows:

Basic package: This package may come with endpoint monitoring, patch management, 24/7 customer service, and basic antivirus.
Advanced package: It may additionally include features like task automation, data-driven insights, and advanced antivirus protection.
Premium package: The premium package may include all the above features along with backup solutions and advanced security features like heuristic checks.

Building the right package is not about grouping products and services together. It focuses more on providing value to customers and fulfilling their IT needs. As an MSP, you need to think proactively about what products go well together and how they can help your customers’ profitability. If you build your MSP offering with products that are of little value to customers, you will not be able to meet the needs of your existing customers or gain new customers.

Pricing your offers

The next big challenge in MSP offering lies in coming up with the right price for your packages. If you are starting in the MSP space, your price plays a key role in attracting new customers. Hence, you need to consider the following factors while determining the price of your products:

Cost and overheads: As an MSP, you are likely to incur a lot of costs associated with software pricing, business operations, rents, salaries, etc. Calculate all these expenses and determine a reasonable margin while pricing your packages.
Value-based pricing: Your pricing should not be dictated by costs alone. You must price your packages based on the value they provide. You need to charge based on the intellectual capital you have invested over the years. Always make sure that you do not have to revise your price every time there is a little fluctuation in your costs.
Competitor evaluation: You do not always have to price your products lower than your competitors. However, it is good to have an idea of the market price for the services you provide. If you have a unique offering that gives you a competitive edge, you may charge a premium price compared to your competitors.

Key things to note

Since technological changes are happening rapidly, MSPs must do whatever is necessary to keep up with these changes. This means they must revise their packages every six months to ensure that they are up to date. Also, ensure that you provide clear information to your customers about what to expect from a package.

Irrespective of the packaging strategy you use, you need to have a clear vision of the type of service you wish to provide. This goes a long way in helping you come up with the right offer for your SMB customers.