Managed Services Pricing: 2112 Group Says MSPs Hurt ThemselvesManaged Services Pricing: 2112 Group Says MSPs Hurt Themselves
Many managed services providers continue to hurt themselves with poor pricing practices and lack of price integrity, according to a new 2112 Group research report sponsored by N-able Technologies and NetEnrich.
December 15, 2011
2112 Group Larry WalshMany managed services providers continue to hurt themselves with poor pricing practices and lack of price integrity, according to a new 2112 Group research report sponsored by N-able Technologies and NetEnrich. Generally speaking, MSPmentor believes the report’s conclusion is on the mark.
Similar to the “race to the bottom” pricing discussion, 2112 President and CEO Larry Walsh says “poor pricing practices” are “stripping away MSP value and violating price integrity.” True, many MSPs compete on price and spend far too much time discussing commodity-oriented fees for remote monitoring. But I do believe there’s hope for the industry and plenty of MSPs are avoiding the commodity pricing game.
A few examples of success: Numerous MSPs that participate in the TruMethods coaching and peer group organization say they charge as much as $100 to $150 per user per month for all-in managed services, shifting away from per-device pricing. And some of the TruMethods members, such as masterIT, now practice per engagement pricing — basically charging a flat fee that blankets an entire office location.
Meanwhile, organizations like Service Leadership Inc. have helped MSPs to truly pinpoint their cost of services while blending product sales, project fees and managed services fees into mixed revenue streams.
Here Come the Trunk Slammers
But as more resellers try to transition into the MSP market, there are numerous examples of MSPs introducing aggressive pricing without fully analyzing monthly costs and potential profit margins. To combat that problem, N-able, NetEnrich and 2112 Group have been hosting webinars and producing research, such as the latest 2112 Group report — which is available to N-able and NetEnich partners via the vendors’ respective websites.
N-able specializes in remote monitoring and management (RMM) software for MSPs. NetEnrich promotes “closet to cloud” services to MSPs, and is best known for its NOC (network operations center) services. The companies work closely with each other and the Ingram Micro Cloud initiative, which attempts to help VARs and MSPs source cloud and managed services solutions.
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