On this page
Summarize with AI
Open this article in your favorite AI assistant for a quick summary.
How to price a managed services offering can be a frustrating topic for a lot of MSPs, new and veteran alike. I wanted to offer some ideas on how to really simplify your pricing strategy, and how to protect your managed services margins, whether it be for cloud or managed services products.
One of the trickiest aspects to setting a price for a managed services offering is that too often we look at managed services as a product. This can be particularly tempting if your company used to be a VAR. For new MSPs particularly, setting prices can be difficult because there is no comparative service catalog against which you can baseline the value of your own services. This is why so many MSPs contact us asking what the other MSPs are doing. Nobody likes to be outside the group norm.
Start with Margin
It's all about the margin. No matter how you price your services, if you don't make enough margin you will ultimately go out of business. So, step one is to build into any managed services offering (yes, this includes cloud) a set margin. I'll use 50% gross profit margin as a good starting point. How did I come up with that number?
Anything below 30% gross margin and you are deemed to be an "at risk" MSP. MSPs going through the UCS audit process must show gross margins of at least 30% or greater, otherwise they will be viewed as having risky corporate health. So, at 50% gross margin, any MSP product you deliver ought to be well insulated against margin erosion.