The ideal MSP pricing range to enable you to run a profitable business and scale faster is $125 to $200 per seat per month.
At this price range, you can hire high-tier employees, afford a SOC team, and even bring in a Chief Information Security Officer (vCISO) on a need-be basis.
However, when starting, charging $50 to $75 per seat per month is sufficient to get things up and running. As a new business, you may not have the capacity to provide the services of a fully-fledged MSP, so you’ll want to offer a reasonable rate to help win your first customers.
I recommend scaling to anywhere between $75 to $100 per month after winning your first few customers. With this rate, you can cover the basics like endpoint antivirus, network monitor, and a 9 to 5 employee.
A profitable MSP pricing range is between $125 to $200 per month per seat.
Charging $50 to $ 75$ per seat can enable you to get your MSP service off the ground but won’t guarantee a thriving business.
An MSP pricing plan of $75 to $100 per month lets you take care of the basics while setting up your business for growth.
You’ll likely find high-paying clients in urban areas compared to remote locations. As a result, an MSP service based in a busy metropolis can charge more than one located in a remote town with fewer customers.
MSP Pricing Models
MSP pricing largely falls under the following categories:
As the name suggests, per-device pricing involves charging a fixed fee for each device your MSP manages. The model suits businesses with many devices needing regular maintenance and support.
The advantage of per-device pricing is that it provides a predictable cost structure for your client, making it easier for them to budget for their IT expenses.
With the per-user MSP pricing model, your client pays a fixed fee for each user who needs IT support. The model is ideal for businesses with few users who require a range of IT services.
The advantage of per-user pricing is that it provides a more personalized service for each user, which can lead to better customer satisfaction.
Tiered pricing offers different levels of service at varying price points. Here, you can provide three or four service tiers with different support and pricing. The model is suitable for businesses with varying IT needs and budgets.
The advantage of tiered pricing is that it allows businesses to choose the level of service that best meets their needs and budget.
Value-based pricing focuses on how much your product or service is worth to your customer. The model allows you to charge higher prices for services that offer more value to the client.
When considering value-based pricing, you should take into account the following factors:
Customer’s perception of “valuable”: You must understand how your customers see the value of your services. You can do this by conducting surveys or focus groups to gather feedback from the client. Then, use this feedback to adjust your price.
Service differentiation: You must differentiate your services from your competitors. You can achieve this by offering unique or higher service than their competition.
Cost of service delivery: How much does delivering your services to your client cost? How much are you paying for hardware, software, and personnel? Model to cover your costs and provide a reasonable profit margin.
A La Carte
A La Carte Services MSP pricing enables you to offer a package that lets your clients select specific services based on their unique business needs.
The A La Carte model fits organizations with varying requirements or those looking to supplement their existing IT capabilities with specific expertise. The advantage of this pricing strategy is that clients have transparency over each service's scope and can control their budget by selecting only what they need.
On your part, a La Carte service allows you to offer more specialized services at premium rates, attracting clients with specific needs without impacting the cost structure of standard service packages.
If you’re going to provide a La Carte billing service, you should be in 15-minute increments, not hourly. That way, you can ensure you’re compensating your staff appropriately and not overcharging your client.
Bundled pricing combines various IT services into a single package at a consolidated price. Your clients benefit from a more predictable pricing structure, making it easier to budget than a la carte or hourly billing models.
The potential advantages of bundled pricing for MSPs include increased sales and revenue, as it encourages customers to purchase a more comprehensive suite of services. In addition, it helps create awareness for other offerings that clients may not have considered initially.
You can also upsell your clients beyond your standard pricing and plans. Some of the areas you can upsell or include in your package packages to enhance service offerings and increase monthly revenue:
Providing monitoring tools like active track
RFID scanning for access control
Providing infrastructure management software like Auvik
Off-site and onsite server backup, etc.
MSP Pricing: Best Practises
While there’s no “one fits all” MSP pricing model, sticking to the following best practices can help you determine a sweet spot with your rates.
Determine Your Costs: Accurately identify all expenses involved in service delivery to ensure competitive pricing while maintaining profitability. This includes direct costs, overhead, and an acceptable margin. Understanding your cost structure is crucial for sustainable business operations.
Keep an Eye on the Trends: Stay informed about industry trends to proactively enable your MSP to adapt services, technologies, and strategies. The idea is to maintain relevance and competitiveness.
Determine Your Target Customers: Pinpoint a specific market segment that requires your services to enable you to tailor your marketing strategies and service offerings. Know your ideal customer profile to help you allocate your focusing resources effectively and achieve better sales conversions.
Standardize your Offer: Create uniform service packages to streamline operations and simplify the sales process. Standardization can lead to economies of scale, improved efficiency, and easier service delivery.
Compete in Value, Not Price: Differentiate your services based on unique value propositions rather than competing solely on price to establish your MSP as a quality provider. Focus on delivering exceptional service and support to justify premium pricing.
Go for a Scalable and Flexible Pricing Model: Implement a pricing model that can adjust to varying customer needs and business sizes. That way, you can ensure your services remain accessible and appealing. Besides, scalable pricing accommodates the MSP's and its clients' growth, fostering long-term partnerships.
In the video below, I recap MSP pricing to help you better determine a structure that works for your business.
Building a Profitable MSP Business
Pick a pricing model that balances competitiveness with profitability.
For those starting, a charge of $50 to $75 per seat/month is ideal, while more established MSPs should target $125 to $200 per seat/month.
Furthermore, offering all-in-one package services and avoiding a la carte pricing can help create a more streamlined, profitable business model.
To your success!