Transitioning from Break-Fix to Managed Services Part 3: Pricing & Operations
BY IT GLUE | March 12, 2019
The biggest shift in the transition from the break-fix business model to managed service provider (MSP), comes down to your pricing and operations. In other words, how much are you going to charge for your services, and how are you actually going to operate in order to provide these services. Consider the following.
Choosing the right pricing model
Break-fix businesses tend to rely on an activity-based revenue model. Your clients come to you with a problem, and they’re charged based on that circumstance. As an MSP, you’re likely going to shift towards focusing on your monthly recurring revenue (MRR), and thus be charging on a monthly basis.
The key to remember here is that you’re no longer simply stepping in when it’s time to solve your clients’ problems (though your job will still involve some element of that). Rather, you’re preventing problems from happening in the first place. The service you’re providing is uptime, and for that, you’re able to create a more stable flow of revenue.
The further you get into what kinds of services you’re going to offer, the more your pricing model is going to develop. For example, you might offer an a la carte model, where different services are individually priced, or where some are bundled. On the other hand, you might focus on price per user, rather than per service, where every user receives the same service for the same price. There’s a wide variety of opportunities to hash out here, and they’re not going to come together overnight. Take your time looking into what models are best for your clients and for you.
Mastering your service level agreements (SLAs)
Transitioning from a reactive service model to a proactive one completely alters how your business operates. Your SLAs are an integral part of establishing what your clients can expect from you. They include items such as uptime, how many tickets you might solve per day, or ticket response time. Making these agreements is what holds you accountable for your services. Plus, when you’re achieving great SLAs, your clients are going to notice, and not only is that going to solidify your relationship with them but it might also draw in new business.
Keeping up with quarterly business reviews (QBRs)
If you think QBRs are a hassle, think again. They’re an opportunity. QBRs offer you the chance to sit down with your clients and discuss what’s working and what isn’t – your success, and how to combat your failures. Be wary of treating it anything like a PowerPoint presentation. Instead, treat it as an opportunity for you to extract value and deepen your relationship with your clients.
When preparing for the QBR, and yes, you should be preparing, avoid making the discussion entirely on your success story. It’ll come across as a sales pitch, and won’t bring you anywhere near the kind of value you’re looking for. On the other hand, when you go into it prepared to listen and respond to your customers’ needs, you’ll be in a better position to help them grow, and in turn, help your overall business grow.
Focusing on process
Process, and more specifically, documenting your processes, is how you meet your SLAs, and it’s how you deliver an exceptional quarterly business review. When you’ve got concrete processes in place and documented in one central, secure, and accessible location, your entire team is in a better position to boost your operations. Not only can you develop reasonable SLAs that you actually meet, but you can show (rather than simply tell) your clients how you’re going to hold up your end of the bargain, or better yet, how you’re going to go above and beyond.
When considering how you’re going to tackle your pricing and your operations, don’t underestimate the value that documentation holds. In fact, it’s the one tool you can count on that’s going to assist you every step of the way as you transition from the break-fix business model to building an exceptional MSP.
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