Keys to More Recurring Revenue: Pricing and Packaging

Just a few changes could lead managed service providers to higher recurring revenue.

Gary Pica, president of TruMethods, tells Channel Futures that many MSPs are still figuring out how to present their services to customers. He says an emphasis on technical aspects rather than business outcomes is one of the chief problems.

Pica spoke with us to preview the education session, part of the revenue and supplier portfolio conference track sponsored by Cyxtera at Channel Partners Evolution, Oct. 9-12, in Philadelphia, that he will lead.

Channel Futures: What holds MSPs back from maximizing their recurring revenue?

Gary Pica: Most MSPs have trouble translating the value of their service offerings to customers and prospects. The result is selling less monthly recurring revenue (MRR) and selling at a lower price. Part of the issue is their approach to packaging their service offering. MSPs tend to focus on technical features rather than the value of their offering to the customer business. If you can relate your services to business impact, you can sell more MRR at a higher price.

Gary Pica

CF: Could you give us one strategy for improving sales and profitability?

GP: Many MSPs don’t have a simple way of calculating the per-seat cost of their service offering. Without an accurate seat cost, it is very difficult to determine a price that maximizes profit margin. It is also hard to justify the price and value of their service offering. The simple change of gaining command over your seat cost changes the perceptive of an MSP. During my session I will share a step-by-step process to determine your service-offering pricing.

CF: What do you hope the audience will take away from your talk?

GP: My goal is for attendees to leave with a few items that they can implement into their business immediately. Small changes in your approach to packaging and pricing your MSP service offering will translate into big results in your business. It can transform your sales results and dramatically increase profit margins.