MSP Monthly Recurring Revenue: Why Is It So Important?

| Author
TruMethods

Many MSPs are struggling to increase revenue, which leads them to tackle any and every project they can. That MSP sales approach often leads to a lot of one-time projects and a lack of financial stability.

With a few simple changes to your MSP packaging and pricing model, you can start closing deals that are structured to bring in monthly recurring revenue (MRR).

Find out three reasons why MSPs should refocus their sales efforts on driving monthly recurring revenue, and learn how this pricing model puts you on the path to becoming a World Class MSP.

1. MRR Minimizes Customer Churn

If your MSP does not operate under a monthly recurring revenue model, you’re probably left wondering what projects your company will be working on for which clients during any given month. For instance, a client that you partner with for a three-month system implementation may disappear once it’s complete. These short-term clients lead to a high number of clients lost per month, your churn rate.

However, with the MSP monthly recurring revenue model, you’re never in the dark about which clients you’ll be working with this month or next. By committing to service based on recurring revenue, your clients have longer relationships with you, and you know exactly how many customers your MSP will have from month to month.

2. MRR Provides Financial Stability

Just as you can’t estimate the number of customers you’ll have in a given month when you work on a project-to-project basis, you can’t predict MSP sales and revenue each month. Maybe this month you land three projects, but next month you don’t close any deals.

With an MSP monthly recurring revenue model, you’re never left guessing if you’ll be able to pay the bills. You’ll have a steady flow of income that gives you confidence in your MSP’s financial stability.

3. MRR Enables Growth

Ultimately, your goal is to grow your business, your revenue and your client base. When your MPS packaging and pricing model is built on recurring monthly clients, you’re able to plan accurately. The decreased customer churn and the increased financial stability set your business up for major growth.

Take the guesswork out of your financial plans and increase your chances to become a World Class MSP. Reevaluate your MSP pricing model to make sure it encourages recurring monthly engagements, and focus your sales efforts on driving monthly recurring revenue.

Learn more about effective MSP packaging and pricing strategies. Download this free tipsheet.

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TOPICS: msp sales MRR

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