The Gap is Widening for MSPs

There has always been a gap between top-performing MSPs and the bottom half of the market. When I say top-performing, I don’t mean the largest MSPs. I mean the most efficient. There is some scale required to get to a base level of efficiency. But after that, I measure profitability first and MRR growth second.

You see a wide gap in profitability results in almost every industry. Often when an industry experiences a lot of changes, the gap widens. And that’s what I see happening to MSPs.

So much has changed and is changing. And not all MSPs have managed the change in the same way. Profit is just one of those results. But we can focus on something much simpler, which is price.

I see a bigger gap than ever before in terms of the average seat price (ASP) MSPs command in every market. I see people with an average seat price of $75 or $80 and in the same market, someone who averages more than $200. How can that be? Why are customers willing to pay some MSPs over twice as much? The answer is it’s simple, but not easy.

Customers only pay more for one reason — they see more value in the offering. That’s the simple part. Here’s the hard part: How do you build more value? This is where it gets interesting. Prospects and customers must see why your approach will impact things that are important to them in their business.

If you can show them how proactive roles and processes in your offering impact risks and pain that you’ve uncovered, then the higher price becomes the reason they would buy. Some MSPs are very good at this. Others are still selling with the same basic approach they had three to four years ago and wondering why sales or profits are elusive.

Two very different MSP businesses are emerging. You get to decide which yours will be. Ask yourself the following: “Which side of this gap am I on today?” Then, take an objective look at why. Look at your tightly held beliefs of what’s possible.

Even if your experience in business up until now tells you that customers won’t pay more. They’re paying more. They’re just not paying it to you. This is not my opinion, but my experience.

Once you see this clearly, the work to be better, more profitable, more scalable, and more valuable in your business can begin.

TOPICS: High-Value ServicesMSP growthMSP productivity
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