Two Trends In Managed Services Prices

Are you charging "by device" for your managed services? Perhaps it's time to move to a "per user" model that also includes quarterly -- instead of monthly -- fee adjustments. The approach, which Autotask CEO Bob Godgart described to me earlier today, caught my attention. Here's why.

First, the key goal: Your customers want simplicity and predictability.  Godgart recommends two simple steps to achieve those goals.

  1. User-based pricing: Instead of charging per device (desktop, laptop, firewall, server, etc.) move to user-based pricing model. Give customers a simple monthly fee that allows them to understand how much they're paying per employee.
  2. Offer a quarterly price protection:  Imagine if  a small business has 30 employees in January, 32 in February and 37 in March.  Yes, try to get the small business to bring their new employees under the managed services contract each month. But don't charge your customers for those new employees until the beginning of the next quarter.
Item 2 above is counter-intuitive. However, it might impress your customers, enhance loyalty and deliver more recurring revenue over the long haul. Using the example, you'd charge the customer for 30 employees in January, 30 in February and 30 in March -- even though they've grown to 37 supported employees. And then in April, you'd start charging them for the 37 supported employees.

In that scenario, the customer maintains a predictable quarterly cost, and realizes they're getting extra value from you. In return, you will likely have an easier time up-selling your customers in a more predictable fashion. You'll lose a few dollars over the short-term, but gain recurring revenue over the long haul.

Sound logical? Or does that approach introduce new challenges? I'm all ears.
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