Pricing strategies and trends in the Managed Service Provider (MSP) industry are constantly evolving due to market dynamics, economic factors, and technological advancements. This can make it difficult to decipher if your MSP business is priced competitively.
That’s why, in our 2023 pricing report, we surveyed over 400 IT and MSP professionals across the U.S. about how they’re currently pricing their business. As a result, the report provides not only a snapshot of the landscape of the industry, but also valuable insights and analysis into current pricing-specific data.
This blog will delve into some of the key findings from the report, offering MSPs guidance on how to best optimize their pricing strategies to stay competitive and profitable.
63% of the surveyed organizations raised their prices in the past year. Smaller organizations, those that added 51+ technicians, and those offering discounts were the most likely to have implemented price increases.
Key Finding #1: Economic Factors Influence Pricing
Economic factors nearly always play some sort of role in business performance, as the trickle-down effects can have both direct and indirect impacts on cost, pricing, and profitability.
This is a truth that’s reflected in the report. Respondents who reported raising their prices in 2022 cited current economic variables such as inflation and rising labor costs as the top reasons for the price increase.
Thus, to remain competitive and profitable, MSP owners must consider these socioeconomic factors alongside the current state of the industry and, when necessary, adjust their pricing strategies to align with current economic realities.
Key Finding #2: Pricing Selection Correlates with Company Size
One of the most interesting key findings in the report is the correlation between the size of MSP organizations and the number of pricing plans they offer. Larger organizations with higher revenue, more endpoints, and additional technicians tend to provide a greater variety of pricing options.
Additionally, variable pricing plans are favored over flat-rate plans, providing customers with more flexibility in choosing services that match their requirements.
This trend indicates that as MSPs grow, they diversify their pricing strategies to meet the evolving needs of their expanding customer base. In short, flexibility and adaptability are key to success in general, but especially as MSPs go through stages of growth and scale.
Key Finding #3: Cryptocurrency Slowly Ascends in Popularity
Credit and debit cards remain the preferred payment options for MSPs, but the report also indicates a small but growing interest in cryptocurrency as an alternative payment method.
Cryptocurrency offers benefits like decentralization, lower fees, and the potential for international payments, making it appealing to forward-thinking MSPs and/or MSPs evolving to meet the shifting needs of clients, enhance security, or of course – stand out against competitors.
Time and trends will tell if cryptocurrency is here to dig its heels into the MSP space, but for now, the inching ascent in popularity as a viable payment method among MSPs points to signs of staying.
Pricing Strategies for Success
Finally, the report shows that many MSPs struggle with creating a pricing strategy, often due to factors like a lack of time, market research, or fear of customer resistance. However, as technology and digital transformation continue to shape the landscape, MSPs must remain diligent about staying nimble and adaptable.
Successful MSPs need thoughtful pricing strategies, proactive client communication, and the ability to convey their value effectively. The 2023 MSP & IT Professionals Pricing Report underscores the importance of staying informed about industry trends, as they are the key to sustainable success in this ever-evolving tech landscape.