NOW is the best time to raise rates at your MSP. Here’s HOW!

Right now, your MSP has a golden opportunity to take advantage of.

What is that, you ask?

To raise your rates.

Before you say, “No way! Not now.” …

The article that follows will change your mind.

Now, keep an open mind & let me explain…

 

Why Now is the Time to Hike Rates (& by how much)

Losing 10-30% of an MSP’s Clients all at once is never a good thing.  A fast way to make that happen is to raise the Standard Role Rate overnight.

Of course, how many of your clients jump to another Service Provider is based on two factors:

  1. The amount of the rate increase

  2. The tone of your communication

The US inflation rate is currently around 8.6%, which is the largest annual increase since 1981.  Government and Federal Reserve efforts to tone down the inflation rate (using measures such as dramatically raising interest rates) have given rise to the perception that prices are 2-3X where they were last year. This creates an excellent opportunity for MSPs to raise rates – WITHOUT Clients abandoning ship.

If you have not raised rates in the last 5 years (you are not alone, typically, MSPs raise their rates every 5 years or so), then a rate increase of 20-25% is merited.

 

A Simple Process of Raising Rates

There is a simple process of Raising Rates that will shake the tree just as much as you would like…but not so much as to put the business in jeopardy.  Shaking the tree is suitable for most MSPs as it encourages high-maintenance, low-value Clients to move on to other MSPs.  Or, at the very least, move them from unprofitable to profitable.

Here is the process:

  1. Create a T&M Contract for every T&M Client at the current Standard Role Rate

  2. Raise the Standard Role Rate for new Clients

  3. Create a Profitability by Client list/report

  4. Meet with the Clients starting with the least profitable

    1. Thank them for their years of patronage

    2. Inform them that the MSP is raising its rates by X%

    3. Let them know that for them, the new rate is $XXX.XX per hour

    4. However, out of appreciation for their partnership, the rates will not go into effect for:

      1. Bottom third, another month

      2. Middle third, another two months

      3. Topmost profitable third, another quarter

    5. Expect a few of these to move on to other Service Providers, but that is OK as it makes room for new Clients at the higher rate

    6. Have a sales process in place to replace Clients with 2-4 New Managed Service Clients per month

  5. As the Bottom third hit the 30 days from meeting with them date:

    1. For T&M Clients, end any T&M Contracts

    2. For Managed Service Clients, adjust any Exclusionary Contracts so they will bill at the new XX% increase rates

  6. Repeat step 5 for the middle and topmost Clients at the 60- and 90-day marks from meeting with the Client

 

90 days from the last Client meeting, all Clients will be on the new rates.  Using this process, less than 10% will move on to another Service Provider. 

 

Avoid Having to Use the Process in the Future

As a side note, having these processes in place will help avoid needing to use this process in the future:

  1. Have automatic rate increases in the Managed Service Agreements.

  2. Have automatic license/subscription renewals in the Managed Service Agreements.  

  3. Have Preventive Maintenance/QBR processes in place, so rate increases are discussed and considered on a quarterly basis.

  4. Have a Profitability by Client report auto-generated monthly, quarterly, and annually.

  5. Have a Sales process in place that grows MSP by 2-4 new Managed Service Clients per month, with a Service Delivery Team well-positioned to onboard that many Clients each and every month.

 

Following the processes discussed above will not only help to ensure Clients are one’s Techs won’t be afraid to talk to but ensure those Clients are profitable and contribute to your bottom line.

 

Of course, raising rates can be scary. And so can leveraging the Autotask software for efficiency and profitability. If you need help with either, give us a call . We’ve seen a few things in our decades of Service Delivery experience, and we’re always happy to help.

 

The elephant in the room:

Who is Advanced Global, and why should we listen to them?

Recently someone we’ve been in communication with since DattoCon 2018, who was faithfully reading our articles, commented that up until a few months ago, “I really did not know what Advanced Global does.” So here are a few bullet points to let anyone interested know who we are and what we do:

  1. We Are – the Autotask Global Service Delivery Authority

  2. We Help – MSPs thrive

  3. We Solve – Service Delivery issues, inefficiencies, and challenges by making sure:

    1. Techs know what to work on next

    2. Someone is managing all open tickets and driving them to completion

    3. The staffing levels are correct, and the workload is balanced

    4. Real-Time Time Entry is a cultural habit

    5. The Client has a great client experience

    6. Profit is maximized

    7. Autotask is being fully leveraged

    8. The historical data that is in the Autotask software is accessible to benchmark, track & USE effectively

    9. The Service Delivery operations can scale

    10. Projects are completed On-Time and On-Budget

    11. The Company can grow

    12. MSPs know what they don’t know

  4. Our Tools:

    1. Autotask “Best in Class” standard build

    2. Our MSP robust Service Delivery SOP library

    3. Advanced Live Reports

    4. Expertise in providing a transformational experience

 

Note: We are not philosophers; we are doers with 31+ years of Service Delivery experience, bringing real Service Delivery Improvement change, profitability, and Best in Class performance.

 

We start by offering a FREE No-Obligation PSA Configuration Evaluation.

 

Steve & Co

 

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