Managed Services: Time to Abandon Per-Device Prices?
On the one hand, plenty of managed services providers have made a healthy living with per-device/per month business models. But on the other hand I’m starting to hear from MSPs that no longer discuss per-device price quotes with their customers. Is this the start of a bigger trend? Here are some thoughts.
First, some background. In a recent Tweet, marketing consultant Robin Robins pointed out that 78 percent of MSPs charge on a “per device” (i.e., per workstation or per server) basis. And our annual MSPmentor 100 survey includes metrics for how many devices MSPs have under management.
Still, some MSPs are starting to re-think per-device price quotes. Three prime examples include:
- Howard Cunningham, president of Macro Systems LLC;
- Brett Jaffe, president of IT4 Inc.; and
- Alex Rogers, president of ARRC Technology.
During a phone call today, all three MSPs told me they continue to track their per-device costs in order to help set pricing. However, they no longer give per-device price quotes to prospective customers. Instead, they deliver a single price quote listing all of services — without an itemized per-device cost.
By avoiding per-device price quotes, customers can set the value of the services in their own mind, notes Rogers. For instance, say you’re charging two different customers $3,000 per month for a suite of managed services that includes patch management, managed security, online backup and help desk services.
- Customer A may believe the most important piece of the service involves online backup.
- And Customer B may more fully value help desk services.
If you break out the per-device costs for each customer you could wind up charging too little for extremely valued services and too much for low-value services. By offering a single, comprehensive price quote, customers set the value for each service in their own mind, Rogers adds. Cunningham and Jaffe seemed to back up Rogers’ point with similar anecdotes about their own businesses.
All three MSPs will discuss pricing trends a bit more fully during our June 23 webcast. In the meantime, I wonder if per-device price quotes are a fading trend?