How MSPs Can Be More Profitable
“You get what you pay for,” is often used to describe a disgruntled shopping experience. When it comes to technology, taking the cheaper route often means fewer features and less functionality. Nowadays, people simply can’t (and shouldn’t) treat their data protection this way. It’s also understandable that vendors and MSPs still want to remain profitable, because as the saying goes, “Nothing good comes cheap.” While that may be true in some cases, there are still ways for MSPs to be highly profitable without hiking up outrageous prices.
Since 2007, Datto has been learning from our MSP partners about what benefits them when looking at providers’ solutions.
Vendor complexity can hinder MSP profitability. No matter how high the product quality, if the pricing model isn’t straightforward, the solutions will not sell. It becomes difficult to position products when they require additional resources in order to make them properly fitted solutions. Successful MSPs often charge recurring fixed prices. From there, they analyze customer relationships, note where they may be under or over-serving and make adjustments from there.
Predictable Recurring Costs
Customers are more willing to buy when recurring fixed prices are in place for another very important reason. From a budgetary standpoint, it’s often easier for them to get approval for additional monthly expenses. Hitting a customer with large-up front capital buy-in slows the sales cycle. Many end-users will require board approval, which is when the red tape may start appearing. Monthly fees may not sound appealing, but thinking long-term they quite literally pay off.
When solutions are simple to set up, MSPs also benefit from setting fixed installation fees. If their provider equips them with a seamless, standard process to install solutions for their customers, they know exactly what they’ll need and how long it will take to get a new customer up and running. There proves to be no need for complicated pricing around setup fees. This practice puts the customer’s mind at ease as well, because they know what to expect. Over the years, we’ve learned that keeping this process simple can foreshadow future success for our partners and encourage the welcoming of Datto solutions.
Simplicity + Automation + Integration = Profitability
Increasing profitability doesn’t necessarily mean doing more work either. For an MSP, increased profitability can be a result of doing less, because the products they’re selling are highly reliable. Highly reliable products owe much of their functionality to simplicity. Simplicity leaves less room for confusion and mistakes. If an MSP can offer a product that requires very little maintenance from both the end-user and themselves, the relationship will move along much more smoothly.
In terms of simplicity, partners have pinned a high-level of automation and integration as a huge plus. Solutions that display self-service leave MSPs tasked with far less maintenance. When solutions are working well for customers, that means they’re working well for MSPs. Customers become less likely to search elsewhere for their IT solutions.
By removing much of the technical leg work from the MSP, these is less room for error when starting new customer relationships. Pricing is also important. When constructing your pricing model, think about it from a customer’s perspective. What kind of pricing model would appeal to their wallet and your long-term revenue goals? Lastly, customers appreciate a simple and effective process.
Taking all of the above into account, when a solution proves to be robust, reliable, and simplified, “You get what you pay for” isn’t necessarily a bad thing. To learn more about how MSP’s can increase revenue through data protection solutions, check out this great free ebook here.
Rob Rae is VP of business development at Datto, which specializes in scalable end-to-end business continuity.