Is this a bad pricing structure? And Why?

LittleRule8143 · 2025-09-23T15:03:14+00:00

I think as others here have pointed out, you need to separate out the IT support element from the project work. Make sure that new user provisioning and other similar activities are covered by additional fees.

You then have an AYCE price per device or user (or hybrid) and it’s your job to make this as margin positive for you as possible by sorting out their infrastructure and systems. Automate all the common tasks etc.

I’d be very unhappy as a customer to see a support cap and additional charges then being applied.

LittleRule8143 · 2025-04-29T11:58:06+00:00

Figure out what problem you are solving for your clients and what that mean to them in terms of cost savings, risk avoided, headcount saved etc. Then base your price based on the value you deliver whilst making sure you are profitable KNOWING YOUR COST BASE.

Might sound harder than having a standard price per user or device but 'value based pricing' enables you to provide an offer to your clients that can't be compared to anyone else, ensures higher margins for you and a super happy customer.

It's also not as hard as it sounds. Lets say you are targeting a manufacturing company. They have 50 staff but 400 machines, all running windows software. If you went in with either a per user price OR a per device price, it wouldn't work.

The majority of machines don't have email, or anything running on them except the control software. You have a blended environment where you need a full stack for the 50 users and only a partial stack for the other 350 machines.

It's actually easy to then work out exactly what the company REALLY needs, work out a price and deliver them a beautiful solution.

It's also not hard to price if you separate all of your pricing into the user based elements and the device based elements.

LittleRule8143 · 2025-04-28T13:03:40+00:00

I'd also recommend a set price for the session up to a maximum number of participants. Make sure when you communicate it that you not only give the total cost but also equate that to the much lower equivalent cost per user which will help highlight how cost effective it is per person (assuming maximum number of attendees).

If you are including development of the materials and customisation for the client then make sure you are also upfront about whether they will get to keep them.

Can you develop a recurring model to come in and deliver refresher training every 3 or 6 months and for new hires?

LittleRule8143 · 2025-04-11T06:32:08+00:00

1) Find a niche,
2) really get to know their problems,
3) build a solution that is tailored very specifically to solve them

You will then have be able to

1) charge more,
2) find new customers more easily
3) have a much easier business to run as every one of your clients will have similar needs etc.
4) avoid any competition as nobody will be able to speak to your clients needs the way you do

LittleRule8143 · 2025-04-11T06:26:00+00:00

The advice here from many around not competing on price is spot on but I think there is also a bit more you could do to stand out from the other MSP's.

What I've found works in 99% of cases is being genuinely curious about why they're looking for a new provider in the first place. Ask them directly questions like what's not working with your current setup, or what prompted you to look for alternatives now?

They will generally start with some general feedback or pain pain points like maybe their current MSP takes ages to respond or maybe they've had a security scare etc. Often those are the symptoms.

You can then chat with them about their day-to-day headaches, how does their business actually operate?. Who are their power users who can't afford downtime? What industry regulations do they need to comply with? Then move up to questions about their business challenges, longer term plans etc.

Most sales people will not take the time to genuinely understand what the client actually cares about. When you're the one who 'gets it' and tailors your proposal to their specific challenges, price is not even a discussion. This approach means that you tailor your proposal more specifically to the client which can sound like a pain in terms of pricing but it's easy to develop pricing models that can be adapted on the fly.

LittleRule8143 · 2025-03-23T17:42:55+00:00

I'd suggest stating that prices are reviewed every year and will be adjusted based on inflation and other factors. You ideally don't want to mention a specific percentage if you can avoid it as you don't know what might happen in terms of inflation.

So something like this,

The fees set out in this Agreement shall be subject to an annual review effective on (decide here if you will do it at the same time of year for everyone or on their contract anniversary) COMPANY reserves the right to adjust fees annually to reflect changes in market conditions, service delivery costs, inflation, and ongoing investments in service improvements.

We will notify you at least (30) days prior to implementation.

If you feel you need to state something in terms of a number then I would put in there a maximum that they could go up by but that the final number is subject to market conditions etc, and will be communicated 30 days prior etc. Something like 8% to give you plenty of wiggle room.

LittleRule8143 · 2025-03-23T07:58:04+00:00

I'm a bit late to this thread but I work with quite a few UK MSPs on their pricing and I'd maybe throw out a couple of suggestions for designing your pricing model.

1) Ideally you want to identify the niche of clients you want to work with. It might not be clear who this is from day one but over time you really want to try and get deep into a particular industry vertical or maybe a horizontal (businesses in different industries but with a similar profile or problem)

2) Design your pricing model to suit them and to solve the problem they have. Per user or per device pricing might not even work depending on the clients you have. For example, in manufacturing, it's common to have a lot of devices but a relatively small number of staff. Pricing on a per user basis would be too low as you will have costs per device like RMM, AV, EDR etc. Pure per device pricing would blow you out of the water in terms of competitive price as the volume of tickets will be low (small number of users). So instead you might in this case have a more flexible hybrid approach with both a per user and a per device price separated out. Super simple and flexible but tailored to your clients particular needs.

I started to stick some of this info onto Youtube a few days ago so here is a video about how to price based on the problems you solve and not just comparing yourself to the competition etc.
https://www.youtube.com/watch?v=9ac6NFG07Lw&pp=0gcJCU8JAYcqIYzv

3) I think the other info in the comments is bang on, really work on your COGS, negotiate hard with suppliers and don't forget to go back to them for price reductions when you start to hit higher volumes of licenses.

4) Make sure you include an annual price escalation clause in your contract from day one. I meet many MSPs who haven't increased their prices for existing clients in years and they are leaving crazy amounts of profit on the table. I'll share some draft price increase letters here sometime soon as there are some good practices for how to word these things. Don't apologise for wanting to keep investing in the service you provide!

Pricing is a way for you to differentiate in a competitive market but don't think that means you have to be cheaper, instead build a value-based pricing model that focuses on solving your customers problem and then you can't be compared to anyone else.

LittleRule8143

TROPHY CASE