Turning infrastructure-as-a-service (IaaS) opportunities into profit can be tricky. As a managed service provider (MSP), you need to figure how to make double-digit margins on new offerings for them to be worth your while.

While research firms like IDC continue to predict an incline in global IaaS spending, the cost of the technology itself is declining. Gartner projects a 10% year-over-year cost reduction in IaaS technology through 2020.

Three ways to deliver IaaS profitably

There’s still plenty of money to be made in the IaaS space. Use new cost efficiencies to your advantage by following these easy steps.

1. Rethink Flat-Rate Billing

One flat fee might sound great to a customer, but look at what it’s doing to your business. What if a customer’s IaaS usage doubles or triples halfway through their contract? That could eat every last cent of your margin.

Conversely, waiting to see precisely what a customer has used before billing them comes with its own challenges. Fortunately, there’s a way to capture predictable recurring revenue while also protecting your margin.

Instead of just charging a flat monthly fee and hoping for the best, consider building usage tiers and setting expectations with customers that if they move outside their tier they’ll either be charged an overage fee or the remainder of their contract will be moved into the next tier, thereby protecting your margin.

2. Automate Billing

Logging into separate vendor portals to aggregate a customer’s overall managed services bill—which could span several different services—can be time consuming. And the more time you spend on billing, the less profitable your offering is going to be.

Let technology do the heavy lifting for you. When you partner with Pax8, you get access to Command Console, a quote-to-cash cloud services management platform that provides calculators and threshold-management capabilities to project costs and automatically monitor customer IaaS usage.

Better still, Command Console fully integrates with the ConnectWise PSA, making it even easier for you to create both recurring charges and retroactive overcharge changes.

3. Offer a Complete Solution

Delivering IaaS alongside other recurring services can be a helpful way to create greater stickiness with customers as well as grow your business. Not sure where to start? The Pax8 Cloud Solutions Advisors can partner with you to craft the right cloud solution package for your business. Contact the Pax8 experts now to learn more.

Next Step

Start building your profitable IaaS practice today. Get your free Unlocking the Revenue Potential of IaaS whitepaper to discover the 7 steps to SaaS-ify your IaaS business.

This guest blog is part of a Channel Futures sponsorship.