Why Top Managed Service Providers Profit (And You Don’t)

| Author
TruMethods

To stand out among the competition, top managed service providers do more than simply bundle their services and manage clients.

In a marketplace where every MSP has access to the same resources, IT solutions providers have to be extraordinary if they’re going to differentiate themselves.

What does that mean? It means you must transform your organization into a World Class MSP. This is the path to profitability. Let’s break down how to get there. 

Not All MSPs Are The Same: What Makes A Top Provider?

There’s no doubt that securing monthly revenue and commanding a profitable price are major challenges for most MSPs. Too often, sales become stagnant and profit margins are difficult to elevate.

Yet, truly World Class MSPs are seeing towering sales, prices and profit margins. The top 5% of MSPs in the industry generate between two and three times the net profit percentage of average providers.

How are they doing it? After all, World Class MSPs have access to the same tools and resources as every other IT solutions provider. So, what gives them the edge?

It’s all about implementing strategic changes and following the right IT processes. That’s what transforms average organizations into top managed service providers.

You must add value to your services so you’re able to attract more customers, charge higher prices and spend less time on low-value, reactive tasks, like answering IT tickets. 

High-Value Services Command Higher Prices

The best way to identify the success of your business is by the value you provide to clients and employees. The prices your services command are an indicator of this value. Look closely at the MSP pricing for both your hourly rate and your average all-in seat price (AISP).

Top MSPs charge hourly rates at the top of the market and an AISP of at least $150 per seat per month. If your company is not there yet, you have some work to do. 

Adding Value (And What This Really Means)

The services you provide MSP clients are already considered “valuable.” You probably offer some of the following, which all help your clients become better businesses:

  • Support
  • Security
  • Backup
  • Virus Protection
  • Planning

So, adding extraordinary value to these services is accomplished by improving the way you deliver them. Top providers use a methodology to reduce clients’ risk and alleviate the burden of reactive tasks. When you’re able to accomplish this, you increase productivity and functionality.

Part of this methodology involves proactively developing standards and aligning your clients’ technology accordingly. Start by creating a list of questions for all aspects of each client’s technology. Then, you must communicate with your clients regularly to ask these questions and determine whether any gaps or issues exist.

With this strategic approach, you are tasked with fewer tickets to address. Plus, your clients’ business processes improve because they are able to rely on the functionality of their technology.

This is how profitable MSP businesses really elevate the value of their services. 

The Key To Increasing Revenue: Continuous Improvement

Only through effective MSP training do you learn how to create a business approach that sets the bar higher for your services. By heightening your value proposition, you transcend the average MSP model. More revenue and greater profitability are hallmarks of a World Class MSP.

The key to success? Continuous improvement. Without it, where will you be five months from now?

Chances are your business is not operating at its full potential. If this is the case, it’s time to implement the right changes and IT processes to escalate the value of your services, command higher prices and increase profit margins.

Ready to learn more about reducing the time you spend on tickets and improving profitability? Check out our free business calculator that will you evaluate key profitability metrics.

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TOPICS: MSP IT solutions top MSP top managed service provider MSP training IT processes

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