MSP State of the Union 2012 | Global Pricing Benchmark Survey and Results

How Does Your MSP Pricing Model

Compare With Your Peers?Compare With Your Peers?

State of the Union [2012]

10 Observations from an Industry Leader

Kaseya [David Castro]

Erick SimpsonVice President & CIO, SPC International

Erick

Simpson

Vice President & CIO

Mr. Simpson is a recognized IT and Managed Services Author, Speaker and Trainer, and contributor to numerous industry publications and events. Author of "The Guide to a Successful Managed Services Practice", the definitive book on Managed Services, and the follow-ups in MSP University’s Managed Services Series “The Best I.T. Sales & Marketing BOOK EVER!” and “The Best I.T. Service Delivery BOOK EVER!”, as well as his newest book “The Best NOC and Service Desk Operations BOOK EVER!”, Erick has also co-authored the HTG publication “Peer Power – Powerful Ideas for Partners from Peers”. Erick's prior experience includes overseeing the design, development and implementation of Enterprise-level Help Desks and Call Centers for Fortune 1000 organizations.

SPC International

www.spc-intl.com

• Over 20 years experience in the IT

industry

• Microsoft MCP, SBSC

• Author, Speaker and Trainer

• Built Call Centers and Service Desks for

Fortune 1000 Organizations

David CastroDirector, Partner and Service Provider Marketing

Kaseya

David

Castro

Director, Partner and Service Provider

Mr. Castro drives the Kaseya partner and service

provider go-to-market strategy and leads all marketing

functions, including market analysis, marketing

communications, demand generation, and customer

relationship management. He has more than 15 years of

software, hardware, and services management

experience in various commercial markets, including

finance, healthcare, education, and government. He is a

high-tech veteran of Tech Data, Skyway Software, and

RedVector.com and a former management consultant at

Arthur Andersen and Blasland, Bouck & Lee. Castro

graduated from The Wharton School at the University of

Pennsylvania with a M.B.A. in Finance and Information

Management.

Service Provider Marketing, Kaseya

www.Kaseya.com

• More than 15 years channel experience

• High-tech veteran of Tech Data, Skyway

Software and Redvector.com

• Kaseya 3 years

About Kaseya

• Enterprise-class IT systems management for everybody

• Founded 2000 & privately held, no debt, no external capital requirements– Consistent, profitable revenue growth

• 33 offices worldwide in 23 countries with 450+ employees– 12,000+ customers

– Millions of assets managed

• 6 patents issued for IT service delivery processes & remote IT management processes– 37 patents pending

• Common Criteria (EAL2+) certified and FIPS 140-2 security compliant

• ITIL v2 and v3 compatible

Why MSPs Choose Kaseya

• A single Kaseya user can proactively manage 1,000s of automated IT systems and network tasks in the same amount of time required by a team of technicians using other techniques

• It’s the industry’s only patented single-server-single-agent architecture; MSPs get enterprise-class capability that is architecture; MSPs get enterprise-class capability that is easy to use and easy to afford

• With 60+% of top MSPs worldwide using Kaseya, they get access to the most robust community available

• And with so many ISVs plugging in to Kaseya via a seamless integration process, they get an easy way to leverage their existing strategic technology partnerships

Our 10 Core Observations on MSP Pricing in 2012

The survey & methodology

• Annual survey of worldwide user base (Q4 2012)

• Sample size 3,500

• Maximum response rate 22%

• Responses from 29 countries

• Prices converted to $USD at FX rates as of 11/14/12• Prices converted to $USD at FX rates as of 11/14/12

• MSP users with 10 to 30,000 devices under management

• MSP users/demographics include– Break-fix, monitoring only, pure-play MSP, and power-user MSP

– Owners, managers, administrators, technicians

• Simple statistical analysis (median and 1s)

Break Fix,

14%

Observation 1:Most MSPs evolve beyond break-fix, yet still use suboptimal pricing strategy

Value

Based,

Service Offering Mix (weighted by response)

How Pricing Strategy Determined

14%

Managed

Services,

86%

Source: Survey of 758 Kaseya Customers

CEO, 33%

Price

Match,

27%

Cost

Based,

25%

Based,

15%

Per Device, 31%

Other, 1%

Value Based, 15%

Observation 2:The predominant pricing model is – still – bundled services

Tiered/Bundled, 53%


Observation 3:Geography still drives block hour prices and per-device prices

Low

Median

$24

89

$27

52

$103

167

$10

16

Per Block Hour Per Desktop Per Server Per Mobile


High

Variance (1σ)

121

14

86

6

255

39

25

3

Less than $1000,

$2501 to $5000, 9%

More than $5000,

12%

Observation 4:The average monthly contract for 67% of global MSPs is $1,001 to $2,500

Less than $1000,

12%

$1001 to $2500, 67%


Less than 25%, 11%

Observation 5:Two out of three MSPs derive more than 50% of sales via managed services

25% to 50%, 22%

51% to 75%, 36%

More than 75%, 31%


Observation 6:Specialty services still are only offered – and delivered – by a few MSPs

Advanced monitoring / data availability services

Advanced security / threat protection services

11%

19%

Responses


Advanced backup / business continuity services

Advanced asset management / product lifecycle services

Advanced mobile management / worker mobility services

Vertical industry services or compliance services

18%

4%

8%

10%

Observation 7:World class MSPs outperform their peers across most dimensions

• Revenue growth rate is 1.5 to 2x higher

• Service delivery quality score is 1 to 2 points better– Measured on simple satisfaction scale of 1 to 10

• Client retention rate is 10 to 25 points higher


• Client retention rate is 10 to 25 points higher

• And…

Observation 8:World class MSPs are significantly more valuable than their peers

Gross Profit


Peer World-Class 1st Quartile

Managed Service Block Hour

Price decrease, 20%

Price increase, 25%

Observation 9:Four out of 5 MSPs are holding firm on pricing – or increasing prices – in 2013

No price change,

55%


Observation 10:In conclusion, there is PLENTY of global opportunity STILL out there

• Value based pricing delivers higher gross profits for the firm

• Specialized services provide new revenue for the firm

• Client centric services – priced according to client value perceptions -according to client value perceptions -ensure higher service delivery quality and higher client retention

• Better client retention and higher firm profits increase employee morale and decrease technician turnover

• For a free live product demo

www.kaseya.com/mspdemo

• For a free trial

www.kaseya.com/trynow

Get Started With Kaseya!

• To speak with us

www.kaseya.com/contactme

@kaseyacorp/company/kaseya/KaseyaFan community.kaseya.com

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MSP State of the Union 2012 | Global Pricing Benchmark Survey and Results

Technology

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