How To Develop An Effective, Profitable Managed Service Plan Billing Structure

In my last article, I gave 17 reasons why operating on a break/fix, hourly support business model is a sure-fire way to kill your IT Support business.

And while I don’t believe anyone will ever be able to convince me that there is a profitable way to operate on an exclusive, hourly-rate basis, that’s not to say that charging hourly-rates where appropriate isn’t an effective way to run your business.

In fact, I believe that the most effective, most profitable and safest way to run an IT Support business is through a hybrid model of flat-fee, managed service supplemented by hourly rates for service not covered in the maintenance plan.

I think the best way to explain is to simply show you the terms I provide to my own managed service clients as an example:

PROACTIVE MAINTENANCE PLAN PRICING:

Our base, flat rate for our Proactive Maintenance Plan is $149/mo. plus $39 per workstation per mo., which covers and includes:

  • 24x7x365 monitoring for up to one server. Additional servers can be monitored for an additional $99/mo. each.
  • You get unrestricted access to the Network Monitoring Dashboard for yourself or any employees you specify
  • 24×7 Instant email alerts are sent to all technicians and are responded to promptly
  • 24×7 Instant email alerts delivered to you or any specified staff member’s email addresses that you request
  • Daily email Network Health Status reports will be sent to you or your employee’s email addresses
  • Weekly Network Health Status Summary Reports will be sent to you or your employee’s email addresses
  • Real-Time System Inventory Reporting – Accessible directly from the Network Monitoring Dashboard. You will have anytime-access to the full detail of your server and workstation hardware and software configurations, which is collected and updated daily.
  • You’ll have unrestricted access to our Support Ticketing System, where you can review up-to-the-minute reports for all service that we’ve performed for your company, detailing the service that was performed, the user that the service was provided for and the specific system that was worked on
  • You get an unlimited number of remote support incidents for your servers and all of your employees, which covers any issue that can be addressed remotely and is limited to a maximum of two hours per incident. This service takes care of all the day-to-day issues like cleaning up slow workstations, adding or modifying user accounts, finding and recovering lost files, modifying access to email folders, etc. Never pay high hourly rates for these types of issues again!

If service is needed that falls outside what is covered with the flat, monthly Proactive Maintenance Plan fee, the charge is $125/hr., which is for the following:

  • Any on-site service required. This is for any issue that can’t be addressed remotely (fixing a workstation doesn’t have network or Internet connectivity, physically installing hardware, etc.)
  • Any service that goes beyond the provided two hour, per-incident limit. You will be contacted and will need to provide verbal authorization for us to continue working on any issue that goes beyond two hours.
  • Any service on your server that will require a change to any system files or might possibly require a server reboot.

The above is provided as an example only, and of course there are many ways to structure an effective pricing model.

What’s important to recognize is how the pricing structure is fair to the client, while protecting you, the consultant against not receiving compensation for excessive work.

This pricing model is also based on the size of the client’s environment, which provides flexibility and easy modification when presenting it to various prospects.

Again, this is only one example of a potential managed service model. Another popular and effective structures includes offering a tiered level of service, such as Silver, Gold, Platinum options.

The lowest level might offer minimal proactive maintenance, such as monitoring only the backups, antivirus and server logs, plus a minimal level of remote support, while charging supplemental rates for all other services.

The premium levels on the other hand can offer all-inclusive services, such as unlimited on-site support, included remote data backup, cloud storage, etc.

Offering an all-inclusive level of service must be approached with caution though. If your pricing structure fails to cover you for major service requests, such as large upgrade projects or service issues that require excessive time to repair, you can find your profit levels completely diminish.

At the same time, if you try to charge an excessively high rate to protect against this potential problem, your client might feel overcharged and could easily be seduced by your competition should they come a-knocking.

In any case, you have a great deal of flexibility when structuring your own, profitable proactive maintenance plan. The basic rules to follow for an optimal support plan are:

  1. Charge a flat-rate for proactive services, where you can monitor and protect your clients against unexpected disaster – and ideally include fast and efficient remote support.
  2. Protect yourself against providing excessive support for reduced fees by supplementing your flat-fees with hourly rates for items not covered – or by creating a plan where extra service is accounted for in your maintenance plan fees.
  3. Be fair in your pricing. Charge your clients appropriate rates for the level of service you will be providing. If you try to overcompensate by charging too much, your clients will surely find someone else who can provide a similar level of service for less.

Create an effective, flat-fee maintenance plan and you’ll benefit by having a reliable, predictable revenue stream supported by highly-satisfied clients.

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