Managed Services Sweet Spot: Small Businesses With 20 to 100 Employees

Small businesses with 20 to 100 employees are the most ideal targets for managed service providers, according to Dan Shapero, senior VP of marketing at Kaseya. Dan made that statement during lunch with me on July 21. I was quick to agree with Dan. But why? Was I guilty of shaking my head in agreement without really crunching the numbers?

Is there a solid, logical reason why MSPs should target small businesses with 20 to 100 employees? Actually, yes. Here's the quick reasoning.

Before I get into the math, please don't consider the scenarios below universal truths. MSP pricing and customer settings can vary greatly. But the hypothetical examples below help to explain why small business with 20 to 100 employees could be your ideal customer target.

Now, the reasoning: Imagine if you charged $100 per desktop and server per month to manage a customer network. That may sound like a high cost-per-system, but let's assume your managed services include a wealth of capabilities (security, storage, patch management, etc.).

Now, the math:

  • For a 20-person company, the annual cost to the small business would be $24,000 (the math: $100 X 20 people X 12 months) -- or about $2,000 per month.
  • For a 100-person company, the annual cost to the small business would be $120,000 (the math: $100 X 100 people X 12 months) -- or about $10,000 per month.
For the MSP, $2,000 a month (for 20 seats) is a nice baseline starting point for engaging a customer. Anything less than a 20-person company, Shapero says, and a managed services engagement might not be worth your time.

On the flip side, small businesses with 100 or more employees may not be very interested in managed services. The reason? Once the MSP engagement costs $100,000 or more per year, it becomes easier for the small business to justify a full-time IT hire rather than MSP services.

Again, the thoughts above are generalized, and I realize your experiences may vary greatly. Still, the key question: Is 20 to 100 seats the MSP market sweet spot? Or are you having success in even smaller (or larger) customer settings?
TAGS: Marketing
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