By Bob Vogel, B2 Marketing
The conventional Managed Service Provider fee typically is based on charging $X per desktop, $Y per server, and sometimes separate monthly fees for other managed devices such as firewalls, mobile devices, etc.
Under this model, each month the MSP must reconcile, account for, confirm and document the actual number of each type of device and present an itemized bill for the client.
While this approach ensures that you get paid for all of the devices you are responsible for managing, the downside -- according to one successful MSP CEO -- is that the billing can get overly complex and the clients can start to resent the incremental escalations in the fees.
“With the growth in the amount of time we were devoting to supporting all the mobile devices given to the clients’ employees, we felt we had to charge extra to remain profitable,” explained Dana Seiler, CEO of Vantage Point Solutions Group. “But after a while, they told us that they felt we were nickeling and diming them.”
In addition, Dana told me, “And our invoices were really starting to get complicated, with different rates for different devices and some being added and removed each month.”
The solution to both of these issues for Vantage Point was to transform their billing from “per device” to billing “per user.” And the key to profitability is to tailor each client’s bill rate based on their specific environment and number of users.
“We don’t have a ‘standard’ bill rate per user,” Dana revealed. “Prior to taking on a new client we run a full network assessment using Network Detective to get a quick and accurate discovery of all of the assets. We also use the tool to dive into Active Directory to see how many users are on the system, and then have the client review what we find to be sure every device and every employee is accounted for.”
Dana said this discovery process is supplemented by a dialogue with the client about overall support needs and future growth plans. Based on all of this information, the Vantage Point team can derive an overall estimation of the man-hours needed to support the client each month; and from that, establish the total monthly fee they must charge in order to make a profit. They then simply divide the total fee by the number of end-users to arrive at the per user monthly charge, which generally ranges between $130-$160.
Dana runs monthly network assessments to detect any changes to the number of users in Active Directory just prior to sending out his simple invoice. He also periodically checks in on actual support costs and runs more complete network assessments to determine if there have been any significant and unexpected changes to the assets under management.
“The per user billing model has made a world of difference for us,” Dana told me. It’s taken a lot of tension out of our client relationships, and we’re even more profitable now than we were before.”
To hear Dana talk more on this subject, and also learn about four other ways he uses Network Assessments to provide improved service delivery, click here to watch his 15-minute segment extracted from a RapidFireTools, Inc. recorded webinar.
