MSP Community Blog

The ASCII Blog highlights articles featuring MSP members from our community as well as ASCII staff

Different Managed Services Models: Does One Size Fit All?
ASCII Community   June 25, 2020

Different Managed Services Models: Does One Size Fit All?

Choosing the right managed services model to fit your needs will help you have the most long-term success with this new way of doing business.

There are two main managed services models: in tiers, or in the “one size fits all” manner. Though there are very good arguments to be made for either, the astute reader can probably infer my preference.  

I acknowledge that many IT business owners adhere to the “all in” service delivery method and make it work quite well for them.

I would make the argument that insisting upon an all or nothing stack limits your ability to appeal to new clients and your growth in the long run. Let us examine both MSP business models. 

Why Not Tier? 

Never having to explain “why that wasn’t covered” has a strong allure to any of us that has had to cross that bridge with a client on a lower tier offering. 

The feeling that these discussions conjure up are strongly reminiscent of those I once encountered, over 15 years ago, when last I sold products with both one-year and three-year warranties, in order to respond to retailers that undercut our product pricing. 

The visceral disappointment of hearing “that’s out of warranty” lasts much longer than the fleeting thrill of a better price. And another issue caused by tiering, especially when it comes to security services, is that some will end up being less well protected than others. 

Of course, even with tiers, we get to set a minimum bar to clear.  

Why Do Tier? 

Why then would I choose to offer tiers of services in my practice? Three compelling reasons stand out. The first is simply that it is easier to place a product or a service when you give a potential buyer a choice. 

Many studies have shown that providing three choices is optimal, with the middle tier usually winning out. The second reason to tier services is that not every client has the same needs. 

Some are true 24×7 operations with serious sensitivity to downtime of any sort; others are far more casual in their needs and attitudes. 

The third reason is the most compelling, having a bottom tier allows you to bring in those networks we all run into that we could never bring on at flat rates. 

Managed Services Light

This is an entry–level plan built primarily upon an RMM agent and might include just automated services such as an EDR client, DNS filtering, user training and Dark Web Alerting services. 

While this offering provides access to remote help desk services, they are billable. Other MSPs bundle a small amount of time with their offerings or sell time block hours. 

Having a lower end offering allows provides us a way to take on the very badly managed sites, to build out the project work and bring them up to our standards before engaging them in flat rate services. 

And since things like faster response times and extended support hours is not available on this plan, there is a natural impetus to move to a higher level of service. 

This entry level plan built entirely upon automated services with no integrated help desk is also how we engage as the comanaged IT provider for sites that just want access to our tools but don’t want to pay for help desk and other more advanced offerings. 

We do occasionally move those sites up the stack as well, but for some, this is just the right level of service indefinitely. This program is also useful as “training wheels” for those sites that have never had professional IT support before, as a sort of “gateway drug” to managed services. 

And since we include no labor with this service, it is highly profitable and very low risk. 

Managed Services Remote

The next move up on the ladder of plans adds flat rate remote help desk services and faster response times, and access to 24×7 support. Most sites are at this level, which costs roughly twice what our entry level service costs. 

This is the “just right” offering for many clients and for us. We earn more, but we are still limiting flat rate support to M-F, 8-5 and promising a reasonable two-hour response window. 

We still charge our standard service rate for work outside of “standard hours” and still charge for on-site and virtual CIO services, but we make good money and satisfy 80% of our clients’ needs. 

Another benefit of this higher level of service is the enhanced suite of security services we offer with it. 

These consist of internal vulnerability scanning and new device alerting, firewall log reading and response services (including publishing of identified bad actors that firewall imports automatically to update its block list). 

We also provide secure, proxied RDS and local device encryption. These services are included at this level, and available as a bundled add-on at extra cost for our entry level service.  

True Managed Services

There will always be those that must have the best. With our top plane, we throw in the kitchen sink, including one-hour response times, on-site support, 24×7 support, Virtual CIO and Mission Briefings services, and the additional security services detailed following. 

This is our most comprehensive service and the only plan that would be considered true managed services by many of the industry gurus. 

It costs about 50% more than our remote only plan but for those with ongoing needs for on-site or 24×7 support, it is worth it. 

Additional security services on this plan include mobile device management, multi-factor authentication everywhere, secure email, and secure password management. 

These services are billed to us by the seat, and since few clients use them for everyone, the cost is low. 

This security package is available as an upgrade on our other plans as well. It really is all about providing choices without overly complicating your offerings. In other words, bundle whenever and wherever you can and avoid line items whenever you can. 

In the Final Analysis

I have chosen to embrace the road of choice above the one size fits all approach to offering managed services. Many small businesses know they do not need (or want to pay for) the top shelf, so we give them choices. 

The biggest concern here is that you set a minimum bar for security and never let them limbo under that bar. You can offer remote only services, 8-5 weekday services, response times and more, all without compromising security. 

Remember, if you get the security wrong, nothing you do right matters. 

For some IT providers, there can be only one way to do things and that is all in. I salute those that can make that methodology work, but I prefer to offer choices. 

Being able to sell top shelf only speaks volumes of the sales and marketing maturity of those that can prosper that way. In my case, the benefits of being able to appeal to a broader clientele wins out. 

In my experience, the benefits of having the tiers described, and to be able to onboard at one level and move up the stack over time, outweighs the benefits of having the one size fits all approach. 

About the author: Joshua Liberman is the President of Net Sciences, Inc. He has been a member of The ASCII Group since 1996.

Reprinted with permission, courtesy Commercial Integrator