MSPs Face Intensifying Pricing Pressure

MSP costs

MSPs Face Intensifying Pricing Pressure

To offset stiff pricing competition, MSPs would be well-advised to reduce their overall costs whenever and wherever possible.

MSP Financial Growth

Just under a quarter (23%) report their three-year average annual monthly recurring revenue (MRR) growth is more than 20%. At the same time, however, 51% put that number at less than zero. On average, MSPs say actual managed services only account for 35% of their revenue.

Average Size of Contract

Just over a third (35%) put the value of an average contract between $1,000 and $2,500 per month. Another 34% put it at less than $1,000.

MSP Pricing Strategies

Almost six in 10 (59%) are using value-based pricing models, 28% are using a cost-based model and 21% rely on a price-match model.

MSP Hourly Rates

The rates MSPs charge per hour range from $88 to $111, depending on the level of technical support provided.

Price for Server and Device Support

Just under one-quarter (24%) are charging up to $125 per month. Only 13% are above $250 per hour.

Number of Bundles of Services

Just over a quarter (27%) bundle three or more services. But about a third (31%) price services a la carte.

Number of End Users Supported

More than half report that the majority of their customers have fewer than 25 employees. Another 32% have 26 to 100 employees in the majority of their customer bases.

Number of Endpoints Managed

Just over a third (34%) manage 1,001 to 3,000 endpoints. Just under a quarter (23%) manage 101 to 500 endpoints. Another 15% manage 501 to 1,000 endpoints.

Reliance on the Cloud

More than 50% now offer cloud services (IaaS, PaaS, SaaS). In addition, 75% of the MSPs who offer cloud services report that this revenue source increased in 2015. Well over 50% also expect revenue for these services to increase in 2016.

Tapping Into Mobile

A full 69% of MSPs said they offer some level of support for mobile computing devices. Another 18% said they plan to actively manage mobile devices in the next six months.

Drivers of Demand for MSPs

Security tops the list of demand drivers, at 26%, followed by the cloud, at 19%, and a general increase in the appreciation of the business value of IT, at 13%.