Break-Even Point
If you have recently changed, or are considering changing, from “break/fix” to offering managed services, then this article is for you.
The Managed Service Provider (MSP) business model can be extremely profitable. But deciding on the best way to charge your clients and clients for services which have a less tangible cost of delivery is an important consideration.
You’ll need to consider factors like how your services will appear on your invoice, and how you set your pricing. You’ll need to decide exactly what it is you’re charging clients for. And you’ll need to ensure that the value of what you do is made clear to your clients.
Let’s look at the three main considerations when deciding how to charge for your managed services.

Contracts

We’ve all seen those indecipherable legal contracts that leave us even more uncertain about what we’re agreeing to than we were before, right? When it comes to your contracts, it’s important to keep them clear and simple.
However, just because you cut a lot of the “legalese” jargon, doesn’t mean you want to leave yourself unprotected. After all, that’s the whole point of having a contract in the first place. So, make sure that the scope of work is set out in crystal clear terms. The scope of work sets out your obligations and responsibilities, and is there to protect you should the need arise.
Be absolutely clear about what services are included, what is billable, and what isn’t. And account for possible changes in your client’s requirements that would necessitate a change in your terms – for example the addition of a large amount of hardware to their system.
It’s perfectly acceptable to redraw your contract as the scope of your work changes over time – but it should always be clear and accurate enough to protect you and ensure you are paid what you are owed.

Bundles

Bundles are a great tool when it comes to maximizing your revenue and keeping your clients delighted with your service. Bundles give you different ways to arrange your services to suit your clients’ needs.
The great thing about bundles is that they can be extremely broad, or you can tailor them to focus on specific areas of need like security or productivity. You can begin with something simple like a Microsoft 365 bundle that will be adequate for most productivity requirements, and then add additional bundles as needed.
The broader your bundles, though, the easier they are to sell as an umbrella solution. When a potential client mentions a particular service they need, you can cover that need and more by explaining that it is covered in one of your service bundles. It’s a great way of exceeding customer expectations, and selling in additional services.

Pricing

Lower pricing is the simplest way to win clients in a competitive market. But it’s a pretty terrible business model! For one thing, every dollar you discount is a hit to your profit margin. And, perhaps even more importantly, there is always a competitor who’s prepared to take a bigger hit. Competing on price alone is a sure fire way to crush your business in the long term.
There’s a big difference between being cheap, and offering great value. Showing the value in the services you provide, and how you provide them, is a way to validate your pricing – so your value proposition should always be clear to your clients.
You might demonstrate your value by reminding clients of the constant threat of security and privacy breaches, against which your services will protect them – or by highlighting the real cost of system downtime which is eliminated with your professional support.
Alternatively, you may choose a less “doom and gloom” approach and talk to your clients about how your services can be optimised to help them do their jobs and attain their goals faster, with less hassle and at less cost to them. Demonstrating productivity increases and improvements in their ability to communicate and collaborate between different arms of their business can be a powerful selling tool.

A Word About Billing

Maximizing your MSP business revenue is about charging what you are worth, and billing your clients accurately and regularly. While you can track what each client owes and when it needs to be paid manually, using an all-in-one invoicing platform can dramatically reduce the time it takes to prepare your invoices, and eliminate errors, ensuring you bill, and are paid for, every dollar of value you provide.
BILLWAZE offers a powerful suite of tools to help you maximize your revenue, spot opportunities in your business, and get paid faster, while spending more time doing what you’re best at. You can take a look at what’s on offer here.

Jeff Liebov Billwaze

Jeff Liebov is the CEO & Founder of BILLWAZE. Jeff envisioned a simpler way out of the complicated world of accounting apps and created BILLWAZE. As a tool, BILLWAZE makes things easy for those who want to get things done fast, without all the hassle. Jeff and the team are continuously improving the platform and are passionate about making the entire billing process simpler than ever.

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