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Fast Growing MSPs Offer More, Charge More

By Edward Gately
January 09, 2017 - News

Edward GatelyA new survey by Kaseya, the IT management and monitoring provider, shows “historic" MSP market growth, and highlights behaviors and strategies that set the highest-performing MSPs apart from others.

The 2017 MSP Global Pricing Survey includes data from more than 900 MSP respondents in more than 50 countries. More than one-quarter (26 percent) of respondents report their average annual monthly recurring revenue (MRR) growth over the last three years at more than 15 percent. That’s up from 23 percent of respondents in 2016.

Kaseya's Miguel LopezAn additional 18 percent report an average three-year MRR between 10 percent and 15 percent.

Miguel Lopez, Kaseya’s senior vice president of MSPs, tells Channel Partners the recurring revenue model is a much better overall experience for both the MSP and the customer.

“It helps align cost consistency for the customer, as well as revenue consistency to the MSP," he said. “There are multiple factors that play into creating and maintaining a consistent, monthly recurring revenue model — which is the ultimate goal for most managed service providers. For MSPs just starting down this path, it’s best to do so by creating services around your area of expertise. Focus on what you know how to do best to demonstrate the immediate value you can deliver to your customers, and the natural evolution from there will be add new services – based (on) customer demand and internal capabilities – that will steadily increase MRR."

High-growth MSPs continually find ways to free up resources (both money and staff) to be able to deliver more services, sell more and increase profits. Also, they are able to appreciate and communicate to clients the full value of the services they provide. For example, high-growth MSPs are much more likely to charge higher rates for cloud services.

Some 12 percent of higher-growth MSPs charge more than $600 per month per environment (assuming 4vCPUs and 4GB/100GB with 2 VMs) for private cloud services, compared to 2 percent of lower-growth MSPs.

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Also, 10 percent of high-growth MSPs charge more than $2,000 per month for cloud monitoring services (assuming VMs, network performance, applications and data-center server) for 25 devices and 2,500 metrics. Only 4 percent of the lower-growth MSPs charge rates this high.

In addition, lower-growth MSPs are 34 percent more likely than their high-growth counterparts to charge the lowest listed rate ($500 or less per month).

High-growth MSPs are diverging from their lower-growth peers by consistently offering ...

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