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ITT

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Your thought on the economy of scale is backwards. The bigger the business, the bigger the discount. Doing $50/PC is more realistic when the account is large rather than when it is small.

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I would suggest that you force a long term contract at those prices. Generally any time you are charging a flat rate for unlimited service you are going to have months that you are losing tons of money. They only way it makes sense is to spread it out over the long term.

While we do offer MSP services we have generally found especially in the SMB where environments are notoriously horrible that this type of pricing costs us money more often than not. That being said it does work very well in some spaces.

Just be warned you could be losing money until you get that environment stable and able to self maintain. Also what type of software are you using to monitor and for AV? That cost there can be a place you could be losing money on as well.

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ITT

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Yes, it is BECAUSE of the size of the clients that the costs go up. Everything you do in IT in a small shop costs more than in a big one. There is so much more overhead to deal with just a few desktops compared to thousands. The cost per desktop in an enterprise is a fraction of the cost in an SMB - they can afford tools that scale, standardization, etc.

The SIZE of your client doesn’t mean what you think it means when you apply it to the “per desktop” cost. It does the opposite. By the same logic, minimum wage should be different based on the size of the company - but that is not how it works. Big companies have scale, small companies have flexibility. But if YOU discount for a company lacking scale, how do you ever justify charging someone more when they provide better margins?

Try this WHY would a company that has more overhead and provides less profit get a discount based solely on those facts?

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Why would it be more? if you are doing a good job, it should be less, even at the high end prices. The point of an MSP is to lower the overall cost by moving bad SMB decision making to good MSP decision making and by the MSP absorbing monthly fluctuations so that the SMB has predictable pricing. If the cost is going up for them, something is seriously wrong with the MSP model that you are using.

When our customers choose to not have proactive management, their costs go through the roof, easily 2-10x the cost of an MSP agreement, because they do things that are reckless. If you aren’t saving them money with the MSP model, you need to rethink the model.

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I definitely see your logic, but I am 100% positive no clients of mine or future ones of that size will go for that price point.

Basically what it boils down to is, do I try to land some accounts at the lower price point or simply have all of them deny me at the higher point…

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Well you have a number of things to consider - do you lower the quality of services to win customers that don’t care about IT and will always try to get the price down? Can you even make money doing that? Do you want to work for free doing desktop support for uncaring companies?

How are they unwilling to go for the price point? How are they operating less expensively today? I think either you or they are missing the financials here. A proper MSP program will save them money. So, if done correctly, what you are offering them saves them money. So the issue is not that they won’t spend the money, but that they won’t SAVE the money.

See where I’m confused? Either you have the wrong price / feature structure, they have more efficient internal IT than you think you can do, they don’t understand their costs or they want to set their money on fire. Figure out which one of those four is the blocker and work from there. If YOU take it upon yourself to absorb every mistake that they make, you will never make it.

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I say this so much to someone trying to get clients. Rule of 1/3’s should always be considered. Arrive at your price by going backwards.

How much do you need to earn per hour to cover your payroll costs (or that of employees)?

How much is your overhead?

There should be a 1/3 left for rainy days and expanding your business.

I am going to be nice and figure that your hourly rate is $20/hour (for payroll to work on these machines). So you are only going to work 2.5 hours a month on a single machine? I doubt that. Generally an SMB customer that gets unlimited service is going to be calling you for every virus, login issue, please help me get Spotify working thing all the time. We figure each machine is about minimum of 5 hours per month in your model. They will use and abuse you for unlimited. Now you haven’t figured in your AV cost or monitoring costs at all. Generally these cost you at least $3/month per machine.

An SMB has very few machines generally less than 100. The less machines you have the more work there will be believe it or not. Also you will have a mishmash of machines which means you can’t standardize anything. If you are lucky they will all be business class with business class software (ha!). The more machines a company has the more likely they are to have purchased a whole slew of the same thing making your job easier.

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I do understand wanting to price yourself so that you can get customers. However price yourself for the customers you want. Real businesses want someone who values their own skills and them as a business. If you do not value yourself and your skills then why should they hire you?

I always tell companies do not undersell yourself but do not oversell yourself either. If you are going after the little guys who don’t value IT then you are always going to be fighting a losing battle on making money. If you are in it to just do IT not make a good living then go for it, there really are people that just want to do IT so bad that they do not care.

If you want to make money in IT then being a 1 man shop makes it difficult.

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Take a look at what I posted here http://community.spiceworks.com/topic/1001343-how-much-would-you-charge-to-support-25-computers?page=1#entry-4706779

Basically, You can not set a price till you understand your costs. This sounds like an opportunity for you to get so recurring revenue. Great, unless the deal ends up costing you a couple a hundred bucks a month, recurring revenue reduction.

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And I want to say, I’m talking purely in relative numbers than absolute ones. I’m not saying that $50 or $100 is the right price, just that the concept of going cheap for those that are small and expensive for those that are big once you have broken it to “per unit” pricing is backwards and self defeating.

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If your customers don’t like your price you have one of the following

issues that you can fix.

  1. Your service catalog sucks (maybe your not using a RMM, your pushing inferior products).
  2. Your not good at sales/marketing (I can’t help you on this, but some confidence helps).
  3. Your bad at IT. (Get some training!).

Issues you can’t fix

  1. Low perceived value from IT (Some will some will not, move on…).
  2. Customer will not accept MSP model (They want to use a PfSense Firewall and you will only support SonicWall)
  3. Customer hates Opex.

Thankfully we moved out of the “cheap/broke SMB world” by

  1. refusing to provide managed services for bad environments
  2. Focusing our sales/marketing on compaines who have money and value high skill IT work.
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Which, in reality, is the only customer group that is going to stick around. Those that don’t value IT generally don’t understand business and are not on a road to success.

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Q: How do I look as far as services and pricing? Has anyone offered unlimited IT support at a month rate per PC? Do clients call excessively too much making it not worth it? Am I at a good price point?

Customer’s Standpoint: What’s your SLA terms for this pricing? If I’m waiting 4 days for you to get back to me, I’m losing more money on labor than I am saving through the MSP offering. If I can count on you to give 2-8 hour turn around? 1-2 day? Whenever you get to it? What’s my recourse if you can’t solve something in a timely fashion? Besides price, why do I want to go with a one man shop compared to the 8 man shop that’s 3 blocks down the street from you?

Business standpoint: How’s your pricing? For tiny office environment? It’s a compelling offering, I won’t lie. But have you gone over your pricing with an accountant? Can you AFFORD your own pricing? What’s your break even? What’s your profit mark? What’s your 5 year growth plan?

Edit. My apologies. There was more to this post but my tablet decided to have an Android inspired spasm yesterday

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There is advice being freely given in this thread for which a business consultant would charge you thousands.

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