10 VARs' Views: Do MSPs Charge Enough For Their Services?

Pricing Your Services

Do solution providers charge as much for their managed services as they should? That was a question debated at XChange Solution Provider 2013 in Orlando, Fla., this week. Several speakers felt that MSPs undervalue -- and underprice -- the solutions they provide to customers. CRN asked several attendees their thoughts on the issue. Here are some excerpts from their responses.

Derek Davis

Principal and Managing Partner
Greenville, S.C.

"Probably we do undercharge. I think a lot of people are reluctant to increase their prices because of the underlying current [of the economy]. Some customers think they can do everything without bringing in experts, but when it gets messed up, they call us in anyway."

David Rice

Tempe, Ariz.

"It depends. Overall, I think the prices of deals have shifted down as customers move toward the cloud. You wind up doing more deals, and I don't think people charge enough because the deal size has gotten smaller."

David Nicoletti

President and CEO
Dealflow Networks
Suwanee, Ga.

"Competitive markets will settle that. It depends on how many services an MSP has, and everybody has different services. Somebody's backup might be better. Somebody's firewall services might be better. We try to charge to be fair and get certain margins. You have to make money or you won't be there."

Herve Chapellat

Techcess Group

"No. Our experience is we tend to undercharge for what we provide. It's a crowded market, and people are afraid they will be undercut on price. They tend to price too low. A lot of people haven't studied the true value of what they offer, and they underprice based on ignorance."

Matthew Hutchings

Henderson, Nev.

"I think some overcharge. We're starting to see more competition, and people are charging a lot for [minimal] quality of service. There are a lot of unemployed people [getting jobs they may not be best qualified for] and college kids offering services, and the quality is not there, and they are overcharging for [their value]."

Michael Goldstein

President and CEO
LAN Infotech
Fort Lauderdale, Fla.

"Definitely not. There are a lot of competitors all trying to get the deal, and you get undercut. I think we're all hoping to add some thing else after. Like you add a high-end Bose audio system or high-performance tires to a [new car]."

Touf Hassoun

President and CEO
Case Technologies
Carnegie, Pa.

"No. It should be more about value, and we should charge based on that value. Why does an attorney charge $400 to $700 an hour and IT companies charge $60 to $100? It should be about the value that we bring to customers. We tell customers why and justify why we charge what we charge."

Brian Goddard

Charlotte, N.C.

"On average, no. We should all sell based on our true value because we're not, because companies like Microsoft and other vendors diminish that value with the services they're starting to offer. If we don't start charging for our services, we're all going to be sunk. You have to find a way to create more value by being a cloud aggregator and charging appropriately, otherwise you're not going to be around."

Daniel Silva

Managed Services Professional
Vision Computer Services
Pampa, Texas

"I don't think we do. A lot of clients go online and Google [the cost of services], which puts pressure on us to lower prices to compete. If we charge for our value, there's still a lot of pressure."

Brian Deeley

President of Mid-Atlantic Operations
Teracat Data Solutions
Orlando, Fla.

"It depends. Hopefully, you have a bucket of tools that you use so that you might sell three of four [services] of that portfolio. I think some are underpriced, some are overpriced. It's whatever the market will bear, but we all try to get the maximum dollar that we can charge. That's the Holy Grail."