MSPs Face Intensifying Pricing Pressure

By Michael Vizard

There's no doubt that in the face of stiff competition at almost every level managed service providers (MSPs) need to be more resilient than ever. In fact, a new survey of nearly 400 MSPs conducted by Kaseya, which offers a platform for managing those services, finds that at least half the respondents are hard-pressed to grow their monthly recurring revenue. However, roughly one-quarter report that they increased that number significantly. Of course, that growth is likely tied to the size of the MSP and how long they have been providing managed services. In general, it appears that MSPs continue to be challenged in terms of the pricing they can command for their services. Yet most also expect that the shift to the cloud will enable them to generate higher-margin revenue in 2016. The challenge, of course, is that many cloud services will be delivered directly by vendors. The opportunity for MSPs is to aggregate those services in a way that provides the end customer with a better overall IT experience. In the meantime, MSPs in the face of stiff competition would be well-advised to reduce their overall costs whenever and wherever possible. We examine key takeaways from the study.

This article was originally published on 2016-01-26