Q: My clients always want to pick and choose what services they get and I feel like they usually miss something important. How do I package my services to make sure they’re getting what they want, while also making sure they’re fully protected? What’s a complete offering for a basic package?
You’ve come to the right place! We strongly encourage our partners to use service tiers to package their offerings. Bundling your services this way is a proven method for simplifying the sales process and bringing in more recurring revenue for your MSP business. While there are clear benefits to this model, you need to make sure each tier includes the services necessary to protect your customers’ information and IT environments.
We asked Adam LaRock, one of the solutions engineers at Intronis MSP Solutions and the host of Remix! With Chef Adam LaRock, for his advice on what services are essential to include in a service tier model. Here’s his advice:
Take a two-tier approach
Before you begin adding services to each tier, you need to complete a few key steps. First, evaluate your services by asking yourself how each service is used by your customers. What services are being used together most often? Are there services that are currently optional and really should be standard?
From there, pick a structure. I recommend using a two-tier approach to get started. The simpler you make it, the easier it will be for customers to understand. You can create a basic package that includes only the fundamental and essential services, while the second tier, or premium package, includes some higher-value services such as more generous amounts of stored data and hosted servers or applications.
Some MSPs choose to use a three-tier approach with gold, silver, and bronze packages to create additional opportunities to upsell customers as their needs change. After you’ve gotten comfortable with the service tier model, you can always transition to this approach.
The next step is to determine the price of each tier by adding up the fully loaded cost of each service and the desired margins. Be sure to account for the time and money you’ll spend maintaining these services.
As you begin selling your service tiers offering, factor in the pain points of each small business customer. Identify the challenges they’re facing, and then offer the tier that provides them with the services they truly need.
What to include in your basic service package
After you’ve followed the four key steps to getting started, you can define what services need to be included in your base package. Keep in mind the difference between the services your customers want and the services they need. Your customers might not realize the importance of certain services, and this presents you with an opportunity to satisfy their wants while also making sure they get what you know is critical to their business continuity.
The services you choose to include will depend on your customer’s unique environments, but based on my many conversations with our partners, I’ve found these services to be the ones they include most often in their basic packages:
1. File and folder backup
This one might seem like a given, but your customers might not see it the same way. Stress the value in backing up files and folders as a way of completely protecting their data. Explain that it’s a best practice to frequently back up their data, and you can even position it as an included service. This indicates a higher level of service, and it becomes an added value rather than an added cost.
2. Local and cloud storage
As you begin backing up your customer’s data, you’ll need to store it. Define the amount of storage space included in the base package and offer a higher amount in the next tier. Doing this will help you upsell the customers that require more storage space. For some customers, you might want to store their data both locally and offsite to the cloud to make sure their data is fully protected.
3. Anti-virus and anti-malware software
Another service that you should include in all of your managed service packages is anti-virus and anti-malware software. The level of sophistication of malware threats and the frequency of their resulting data beaches is on the rise. Including these types of software in your base package will help keep your customers’ data safeguarded from a potential malware attack.
4. Remote monitoring and IT management
As an MSP, your role is to take the IT workload off the hands of your small business customers, so it makes sense to include remote monitoring and IT management in all of your packages.
It’s important to factor in the total cost of monitoring each customer environment so you don’t end up spending all your time and money managing one account. You can do this by performing a needs assessment before you recommend a package. Another easy way to avoid spending too much is to automate the process for remote monitoring and management.
Using Adam’s advice, you can develop a basic package to include these services along with the other services you feel are necessary for all customers to have. As your sales team gets more comfortable using this model, you can introduce more tailored packages to win more business. Offering packages is all about simplicity and balance and should result in a faster sales cycle, more predictable billing, and more recurring revenue for your MSP business. If you want to learn more you can watch Adam’s video, “How to Create MSP Service Tiers” in our Remix! Series.
MSP partners can replay the webinar, “Recipe for Success: How to Drive Sales Using Service Tiers” to learn how other MSPs package their services. In the webinar, Chris Johnson from Untangled Solutions discusses their custom model for reselling the Intronis solution and how this has helped them grow their MSP business. You can access this via the Partner Toolkit’s Webinar Recordings section.
Do you currently tier your service offering? Leave us a comment detailing what’s in your basic package.
Ask an MSP Expert is a weekly advice column answering common questions from MSPs and IT service providers. It covers topics ranging from pricing and selling to marketing and communications—and everything in between.