New MSP Pricing Model: Your Stress Level Per Dollar
Managed services provider (MSP) pricing models certainly vary from one company to another. Some MSPs focus on per-device pricing. Others are shifting to per-user pricing. TruMethods recommends “Chocolate Cake” pricing. But the latest trend? It’s called “Stress Per Dollar” (aka Headache Per Dollar) pricing. Here’s how it works…
Let’s say you’re bidding on a managed services contract involving Acme company. If Acme will generate:
- Low revenue and low stress for you, that’s business worth pursuing.
- High revenue/high margin/high stress for you, that’s business worth pursuing.
- Low-revenue/low margin for you that causes a lot of stress, that’s not worth taking.
Special thanks to Dave Cava, COO and co-founder of Proactive Technologies, an MSP in New York that supports hedge fund companies. Cava and I had a low-stress/low-cost/high-value breakfast this morning. When he mentioned the “Stress Per Dollar” concept, I knew I had to share it with MSPmentor’s readers.
Yes, you already knew the basics about high-stress customers you likely need to fire. But when Cava boiled it down to the “Stress Per Dollar” sound bite, I smiled and said MSPs will love it.
I’ve long held that
I’ve long held that philosophy, but never had a name for it.
Colepc: That was exactly my
Colepc: That was exactly my reaction.
-jp
“You can be cheap or you can
“You can be cheap or you can be a pain in the ass. You can’t be both.” – Dave Cave
I certainly can identify with
I certainly can identify with the concept. We express the “stress” in terms of effort. My only argument to the low revenue/low stress business being worthwhile is that too much of it can thin out your staff and dilute your overall focus.
But I love the Chocolate Cake
But I love the Chocolate Cake analogy – already using it.
The customer can paint a low
The customer can paint a low stress of their environment, which commands a low cost. Only when you sign the contract with the customer, that’s when the customer reveal the high stress with true color. By then, its too late.