Some interesting news from the public cloud front. First, Amazon Web Services just lowered their prices again…for the 42nd time! And, in an obvious response to Amazon’s pricing adjustment, Microsoft will reduce their price for computing power on Azure by about 35%; prices for Azure based storage could be even bigger.
So, why should this matter to MSPs?
MSPs have long battled with pricing issues, especially when customers begin to play one MSP against another. MSPs who have resisted these pricing pressures have used a number of effective techniques for delivering valuable services without pricing them in a way where those services could be poached or run down by other MSPs or customers.
The obvious risk with these latest pricing changes by these public cloud providers is that MSPs (or worse, the customers) will begin to think that their own services should be decreasing in price. Speaking personally, I have been a vocal advocate against commodity pricing in managed services. MSPs need to reject these latest moves by these public cloud vendors and go in the opposite direction.
Public Cloud Providers Don’t Represent Pricing Trends for MSPs
Public cloud vendors like Microsoft, Amazon, and Google, are fighting a very public (no pun intended) battle against one another. Each company has a unique value and believes that lowering prices is the key to winning more users.
MSPs, however, have not seen this approach work. MSPs, at least the ones who are growing, seem to go the opposite direction and sustain and even raise prices when necessary. This isn’t to say that some services, when commoditized, should be lowered; that is natural. But, MSPs need to learn that they are not delivering just commodity services; this is precisely why they stopped being a VAR in the first place.
MSPs need to constantly re-evaluate their service offerings, adding new high margin services while eliminating or reducing the prices for those services which have become less valuable. Only through this continual evolutionary process will MSPs maintain their margins and their relevance.
Let Microsoft, Amazon, Google, and the other public cloud giants fight their war. MSPs, you stay true to your roots and resist the temptation to lower prices, especially on valuable services. Don’t be a commodity victim!