Some of you may have seen the list Channel Insider posted last week on the top 10 challenges facing the channel in 2008. It's a good list to get you thinking, but two areas jumped out at me as being relatively easy for solution providers to tackle: 1) the economy and 2) pricing managed services. Now granted I have an unfair viewpoint because my job is helping solution providers build and price go-to-market managed services offerings, but I thought I'd weigh in and lend a voice.
For challenge #1, an unsteady economy, I think you can combat a lot of this by maintaining a positive attitude and outlook on business. The article says "when things are uncertain, customers tend to just freeze." In my view, although it can be very trying, an unsteady economy can spell opportunity for any MSP, with a slight adjustment or two to your sales approach. In uncertain economic times, customers will want to control costs, eliminate risk, and optimize the yield of their technology investment. To accomplish this, they need the expertise and services of an MSP. If you are able to provide solutions that meet those customer needs, then an uncertain market might be your best chance to solidify and expand your customer base while other MSPs sit it out.
For challenge #2, pricing managed services, the slide show calls out the following: "No one is entirely sure how to price specific sets of services, so everybody is just seeing what the market will bear." Here's my take: The best start to addressing this is to understand your cost to deliver certain services. A cost-up approach means you're never caught in a losing proposition, and you can predict and control your margins. Every service you deliver has only a handful of components to it, and the big two are labor and tools. Know your costs. Know your labor costs for your various levels of technical staff, broken down to an hourly rate. Know what tools you need to use, either fixed cost tools such as your ticketing or monitoring and management system, as well as variable tools such as storage space, anti-spam solutions and other per-unit items.
Once you have all that information, you can build up any service's cost from the ground up. Pricing then becomes an exercise of what profitability goals and needs you have. For most managed IT solutions, gross margin is usually in the 30% to 55% range, and is higher for more mature or complex solutions. Again, doing this every day with people really takes the mystery out of it. Being systematic with pricing is the key, whether you adopt a system or create one from scratch. Stick with it.
Like with many areas of business, it comes down to being a leader or a follower. Waiting to see how others price solutions puts you at their mercy. Freezing your business because the economy is uncertain leaves you to become a bystander.This economy should fuel your business. Opportunity is everywhere in the managed services market, and just takes a little determination and planning to capture.