Cloud Services Will Kill MSP Per Device Pricing Model
Cloud computing and hosted services are killing or squeezing per-device pricing models for managed services providers (MSPs). The big theme is per-user pricing among MSPs at an HTG Peer Group meeting.
Perhaps the headline overstates the situation. But during a few casual conversations today at HTG Peer Group meetings today in Omaha, I heard a clear trend: The vast majority of managed services providers (MSPs) are charting a course to per-user pricing. The reason: Cloud computing in some cases is killing the classic per-device pricing model.
My belief: The trend toward per-user pricing will further accelerate because:
- Desktop as a service (DaaS) is finally taking root with some MSPs, thanks to solutions like independenceIT, among others.
- Each end-user now has multiple devices — desktop, notebook, smartphone, tablet. Charging a dollar here and there for each device is no longer manageable.
- Cloud computing is starting to deeply pressure server sales and on-premises server management. And the cloud also spreads information access to all sorts of devices — not just desktop PCs.
- Some MSPs here are charging a top-line fee — say, $3,000 for up to 30 users. The fee remains $3,000 per month even if the customer has only 20 or 25 users. The fee doesn't change until the customer pushes beyond 30 employees.
- Charging a base, dedicaeted fee for mobile device management has not really taken off among many MSPs. Hence, MSPs are bundling the mobile management charge into a monthly per-user cost.
Will per-device pricing stick around in many niches? Absolutely. A lot of MSPs here say they can continue to generate healthy per-server management fees. But overall, the cloud's impact on pricing models is a key topic here. And the march toward per-user pricing seems clear.
I have been talking about
I have been talking about this model for years, thank you Joe for posting.
Stu
No problema. I think
No problema. I think per-device will stick around for MSPs focused on data center management. But when it comes to endpoint, all the momentum seems like it’s toward per-user. -jp
Hi Joe,
Txs for your post, I
Hi Joe,
Txs for your post, I agree per device charging is costly now people have more then one device. However charge by user gives another chalenge: 50 users on a webserver can be far less demanding then 50 users on a private 3-hosts ESX platform with 15 virtual machines. Sugestions how to put this in a calculation.
Hey Anonymous: You’ve stumped
Hey Anonymous: You’ve stumped me on this one. Let me know if anyone gives you the perfect answer…
-jp
We switched to per user
We switched to per user pricing earlier this year (http://www.kimbley.com/it-support/per-user-pricing/) as per device just does not work with cloud services. I had a debate about this with some ‘older’ MSPs who still don’t take the cloud seriously and vigorously disagreed that per user pricing is correct.
James: Thanks for the link
James: Thanks for the link and background. I don’t think there is a right/wrong answer. It depends on the services you offer. And if the services involve endpoints, I think the mass migration is to per-user.
-jp
I am curious how many
I am curious how many companies are still using per device pricing? We have not encountered any for 6+ years
Per device? Just a hunch but
Per device? Just a hunch but I bet more than 30% of MSPs still offer it…
-jp
How would you charge a
How would you charge a company, such as a Healthcare facility, where many devices have many different users, on many different shifts? There are usually 3 shifts for 24 hour facilities, nurses wings, etc. A healthcare facility might have 40 different nurses, 150+ CNA’s, and another 30+ in administration, etc. Doesn’t a per device model fit better, since a facility as described only has 50 computers?
Hi Anonymous: I would check
Hi Anonymous: I would check in with a peer group and see if (A) you can organize a few health care-focused MSPs into a single group. Time for some vertical market best practices sharing… Sorry I don’t have a clear financial reply for you in the meantime.
-jp
Hi anonymous this all
Hi anonymous this all depends. Like you said in your situation there are around 220 users at the healthcare facility. Yes it would make sense to do per device if you are only charging per PC not adding in the cell phones, tablets, etc. as other devices that might be used. Because if you are supporting those as well then a per device would go higher then a per user. So it all depends on what you are supporting.
Hi all. As you know, we
Hi all. As you know, we publish an annual report of pricing trends and we are nearing completion of our 2013 results (to be released in Q4 ’13). An early view reveals a pretty significant migration to a per-user pricing model (driven by cloud services) combined with a significant number of MSPs who charge more than $100 per month per seat. But indeed, the per-device pricing model still is alive and well. Ill reply back with a free link to the final report once its ready. Thanks. David Castro, Kaseya
Hi David,
I’m looking forward
Hi David,
I’m looking forward to seeing the report.
-Jessica