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Integrators, It's Time to Price Your Services Like Other Managed Service Providers

It's time for integrators to price their services like other managed service providers. If you take a look at any other business services such as Managed IT, Office 365, SalesForce, or even the License agreements from your partners, you will see they all have a set MSRP Pricing strategy. This means pricing a managed service solution as a fixed price, rather than a percentage of the project. When you price your services in this way, you make them scalable, repeatable, and easy for sellers to recommend. Here are a couple of examples of how to price out common technologies that integrators sell.

First, let us think about the majority of the technologies that we represent in the integration industry. What do they have in common? They have a head end and then pieces that connect to them. Access Control- Server then X doors connected. VMS- Server then X cameras. Conference Room- Controler then parts of the conference room. NurseCall- Server then rooms or workstations. I could keep going on, but the point is that the majority of the technologies we sell have a base and then add on additional pieces to that base to fulfill customer needs. So the question comes, why don't we think of managed services the same way?

Let's look at how this might work for a conference room setup:

Head End/Base: First, we want to cover our costs for the tools that we use to manage a customer. The base fee for a customer could be a per site or per customer, fee depending on your customer base. In this base fee, we would want to cover drive time, tools such as a Domotz Appliance or Automate from ConnectWise, and any other costs that may go into managing that customer site. Once you determine the cost to manage a site, you can now calculate this to a monthly or annual base fee.

Variable Add-ons: Next we would cover our variable add-ons for the conference room setup. For this we would look at the different types of rooms you would sell. For example, let's say that in general, you sell 4 types of rooms:

  • Huddle Room

  • Small/Medium Room

  • Large/Board room

  • Training Room

Each of these rooms has different levels of complexity, so their pricing is going to be slightly different. Things to include in this would be repairs, updates, training, remote helpdesk, and license agreements.

Now, let's look at a hypothetical Customer, ABC Inc. ABC Inc. has four total conference rooms at one of its sites. They have two huddle rooms and a large conference room and a Training room. ABC Inc has engaged you to update their training room with all new equipment. You find out that the other three rooms were just updated to a new Crestron system last year from your competitor. (Sad I know, but you are using a new pricing strategy for your managed services, so you will still win the day!)

You have determined that your fixed costs across all of your customers per site are $500 per month. You also determined the following costs per room

  • Huddle Room: $100 per month

  • Small/Medium: $250 per month

  • Large/Board Room: $400 per month

  • Training Room: $600 per month

To complete the training room upgrade project, Your managed service proposal is $1,100 per month ($500 base plus $600 per month for the room).

Now, the real magic of this model for managed services comes in. You blow away the customer on this project, and they love what you are doing for them. You go back to the customer and add the three other rooms to their managed service package. Your total managed service per month is now $1,700 per month once you add in the two huddle rooms and the large conference room. This model makes it easy for you to add additional rooms at a lower cost than your competitors. Plus, the more rooms you add the more profitable it makes the contract since you are already onsite doing upgrades and repairs on the first room and you have fixed costs covered in the base fee.

Other benefits of this model:

  1. It is easier to sell managed services to the bid market after a project closes. (Even if you didn't win the project)

  2. It allows your salespeople to bring up managed services at the right stage of the sales process which will increase your win rate.

  3. It is repeatable and easy for customers to understand.

  4. It's a more accurate way to cover your costs in a managed service program VS doing a % of the project.

  5. You can create SKUs for each product and make quoting simpler.

  6. This is the same way you will price out *aaS for your solutions as well and gets your customers ready to make that next jump!

What do you think? Is the integration Industry ready to catch up to other managed service providers? Let me know in the comments what challenges you feel this type of program would bring to your organization. Could this type of program finally make drastic traction for managed services in the Integration Industry?


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