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Hi Spice heads, I was recently laid off my comfy office gig and have been trying to figure out how to keep my family a float since i was making good enough money for my wife to stay at home with our 3 kids. luckily I had 3 clients whom ive had for a few years on the side as their IT contact they pay me a monthly retainer to do all their IT work for them however i know the rates are very low (at least i think so). Im not looking to raise them but i decided i was going to go full steam ahead with opening and incorporating my own MSP and i have a new potential client that i dont know exactly what to charge him each month. so i want to shoot you guys my models and you tell me if im off on my pricing. this is in the central Florida area of the US .

Current customers i fell i charge to little for:

Customer A:

Call Center with 3 Servers/Website/Customer built CRM that i built VOIP lines and about 30 users on average but we have about 40 terminals that all get used when someone changes seats randomly. All you can eat pretty much at $300/week.

Customer B: 12 computer call room with MINIMAL I.T. no servers just router, switch and computers. All you can eat at $100/week

Customer C: 20 Person Construction company with a few servers a couple websites voip and a 10 seat call center. All you can eat $300/week

The new customer im trying to earn is a small restaurant who has been using their local ISP as their I.T. dept and they constantly are going down they use a old netgear router for everything they have 1 POS system currently but they want me to rebuild the network so it will consists of the following: 1NVR 1 Server for QB/POS back end/Digital Signage. 1 16 port switch. Unifi AP and UNIFI SG. networked audio for music in restaurant, kitchen display system for tickets instead of paper tickets.

I want to offer what i call my silver plan which will include me going in and proactively updating software checking for any issues, also provide webroot security for all endpoints and up to 10 hours a month of remote or on- site support for $1200/mo ($400 give or take a week)

Any advice to make sure im not pricing my self out of the market or giving away the cattle for free would be great. I have a partner who also got laid off with me who is going to help on all my new clients so i cant do it as cheap as i was before.

thanks!

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This is a really tough thing to gauge from a distance, even up close. But from your description, these sound like reasonable numbers to me.

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Funny part is I laughed how underpriced I thought you are on your current customers… and then how overpriced you are on your possible new one. I’m South Central East Coast of Florida so I doubt our local rates are off by that much but curious exactly where you are.

Come up with a formula where each PC is X a month, each server is Y per Month, come up with prices for other common items, and maybe a base fee, and then add an area for special cases like audio systems (We don’t deal with that stuff but thats your choice). You know you hit the sweat spot when this averages out over the months to equal roughly your hourly rate with possible a small discount when you take into account ALL HOURS you worked for them. (Yes track hours on flat rate clients too). Don’t forget to take into account and Software you provide such as AntiVirus or RMM Tool licenses.

Give me a shout if you have any questions or just want some advice.

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The “all you can eat” clause of the existing clients is the largest issue to my eyes- I’m assuming they don’t actually take much time as you were handling them on the side while holding down the full time job. I would suggest renegotiating/amending those agreements along the lines of keeping the same price levels for a suitable baseline work-load each but charging acceptable rates for additional hours/projects. This will help ensure your workload is more deterministic and/or provide additional income if they do require additional work. You could also look at pitching a few projects to your existing clients for some additional cost to help increase your current income. Only suggest implementations that they really could use/need. I’m not suggesting trying to overmilk your existing clients but if you can manage their expectations slowly into a more appropriate rate it would allow you to add new customers without trying to make up your income requirements at their costs.

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Honestly? If you’re trying to do this all yourself, you’re asking for trouble. That model is unsustainable over any sort of growth. The unlimited support bits are utterly dependent on your clients never having serious problems. ONE major issue and you’re in a world of hurt. Two at once and you’re likely to find yourself unable to fulfill your support commitments.

If you truly want to make a go of this, you should be investigating resale of services from one of the larger managed services companies. They have the economies of scale to actually handle “all you can eat” support arrangements. There’s a company in my area that employs a total of 11 people, including the two owners and an office manager. They resell Continuum services and have clients spread across Michigan, Ohio, Indiana, and Illinois - including some pretty large and recognizable names. They’re able to do this because the vast majority of the time-eating stuff (helpdesk, log monitoring, and the care and feeding of endpoints and servers) is offloaded to Continuum’s NOC. Pricing is structured as UnifiedTechs mentioned above: endpoints are $X each per month, servers are $Y each per month.

This gives your clients a predictable monthly cost and gives you a predictable monthly income, but more importantly it also gives you time. Time for sales-y stuff (finding new clients, maintaining existing client relationships, etc), on-site tasks the NOC can’t do (like resolving hardware problems), and providing the premium professional services (like strategic planning) your clients don’t have the expertise to handle.

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Luckily for Clients A, B, and C They are have nothing in writing at the moments they just pay me like they have for the last few years. Now that will all change once I get my pricing figured out I will go thru and keep their pricing the same and allow for so much support time and if they exceed that then charge them extra but I cant raise their rates without justification at this time.

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UnifiedTechs If you don’t mind disclosing what would be reasonable terms for the new customer? I don’t want to price my self out of the job so any insight would be helpful. The good thing is in my last job I was actually thrown into the GM role for the entire company so I know how to manage a company and budgets but I was “too much of an expense” for them to keep on payroll (gotta love when politics come into play)

@brianmcook

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Contrary to what others are saying we do have an “All you can eat” pricing plan, and we also manage all the clients other vendors just like a true IT department does. It is one of the things that make us stand out in the field. But we also have a team of guys so when (and it will happen) 1 or even 2 guys have to handle a major issue with a client we can still maintain our other clients support needs. But this was a decision we made long ago to sell our self as the more exclusive option and we are honest that we are not the right fit for everyone. We also provide Anti-Virus and Cloud backups with our flat rate contracts, they are not optional add-ons, its all or nothing. But that allows us to include them for minimal cost because of the scale we buy.

Is this the right way for you to go? Maybe or maybe not, once your there it’s great, but there was a long time where my business partner (my brother) worked a full time job to pay for food and rent while I tried to get clients and there were a few times where we were days away from failure and having to give it up. And even now 9 years later we are making decent money but I’m not buying a yacht any time soon, but it’s a long game we are playing and it gets better for us every year.

I don’t want to just post my pricing formula in public but send me a PM and I’ll share some of it with you if you think this is the way you want to go.

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Sorry I’m late to this thread. Congrats on starting your new MSP!

Figuring out pricing for your services is definitely a challenge. I used to just charge $X/hr for everything I did, and experimented with “prepaid” monthly hourly retainers as well, before learning that the hourly billing model is very difficult to sustain.

Here’s a good, short read from the CEO & Co founder of FreshBooks about the pitfalls of charging hourly:

https://www.freshbooks.com/assets/other/Breaking-the-Time-Barrier.pdf

I’ve been doing a lot of work on re-vamping our products & services over the past year, working with a sales/CEO coach who has offered excellent advice. Revenue is up, clients are happy, and I’ve been paying a tech to help with the increased workload.

Since you’re in Florida and I’m in California, I’d be more than happy to share what I’ve learned with you - PM me any time!

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Spotted Continuum again.

Have a gander.