Have you ever wondered, "How do the top 1% succeed in this industry while the rest struggle?" We all want to know their secrets and advantages.
According to MSP Success Magazine, 80% of the MSPs and IT Services firms generate less than $1 million in revenue.
A big reason for this is because the business owners juggling multiple roles, not because they need a Go-To-Market strategy, but because they need an A-Team.
Many entrepreneurs try to do everything themselves, from being the CEO to handling technical tasks and sales. This is especially true for small businesses and businesses just starting.
But you don't have to be a jack-of-all-trades to succeed. Invest in yourself and your business by delegating tasks to others. Focus on what you do best and let others and automation software handle the rest. It's time to work smarter, not harder.
But there's more to it.
You must know which business strategies will work and which ones you should stop…
1) Not Charging for Your Time
MSPs often charge a flat fee for their automation and IT services and forget about charging for their time. This can be a huge mistake because you undervalue your time and leave money on the table that could have gone straight into your pocket.
Don’t forget to charge clients for the amount of time you spend helping them out or fixing any issues!
2) Not Having a Pricing Strategy
A pricing strategy is critical to ensuring you get paid what you deserve. You need to consider how much each service is worth and set prices accordingly. If clients know precisely what they’re paying for and why, they won’t feel they are being taken advantage of.
Your pricing strategy should consider:
- Fixed costs: Your fixed costs are unchanging expenses that come in every month, such as rent, utilities, salaries, etc.
- Variable costs: When pricing a service, consider any variable costs that could occur, such as production costs, hourly labor, commissions, etc.
- Standard/ Premium pricing: If you offer services in high demand, consider pricing these services slightly higher. This shows that you are confident in the value of your services. Offering standard and premium services also gives your clients options based on their budget.
Most importantly, ensure your pricing generates a surplus in revenue after factoring in your fixed and variable costs. If you are working with clients in different regions, consider a pricing strategy that makes sense for the particular region and industry.
When setting up your pricing strategy, ensure a recurring revenue component to increase customer lifetime value over simple break-fix work. This will give you more control over how much money you make from each client.
3) Not Offering Value-Added Services
Offering value-added services can be hugely beneficial in terms of increasing your income as an MSP. These services go beyond the scope of standard IT support but can provide clients with additional value, such as better security or increased efficiency.
These services may cost extra, but clients will be willing to pay if it means their business will benefit in some way. Think outside the box when developing value-added services, like an intelligent document or ticket processing.
4) Not Expanding Your Services
Expanding your services portfolio is another great way to increase your profits as an MSP. New technologies are constantly emerging, so stay on top of industry trends and consider adding services that relate to those trends, such as sales enablement or cybersecurity monitoring solutions that are scalable to deploy.
Cross-selling features complementing your customer’s services are a great way to expand upon your primary services, enabling you to upsell and improve the overall customer experience.
For example, an MSP working with an accounting firm may offer cloud backup and storage services for their accounting firm clients to ensure that their financial data is always backed up and accessible from anywhere, anytime. Another option can be offered is document processing for extracting information from financial statements, tax returns, and other financial documents.
Keeping up with industry trends and finding ways to use downloadable bots to deploy them will help ensure that your business stays competitive and relevant in today’s ever-changing market environment.
5) Not Investing in Yourself and Your Business
Investing in yourself is a must if you want to increase your income as an MSP—and this doesn't just mean investing money into training or certifications (although those are important too). It also means taking some time out each week/month/year dedicated solely towards removing tedious manual daily work from your schedule and learning new skills — not only will this help build upon existing skillsets but sharing what you learn will also make you a thought leader in your local market, allowing you to command higher fees from potential clients down the line.
As an MSP, making more money doesn't have to remain a pipe dream—it's totally attainable if you take the proper steps toward success.
By following these five steps, you can increase your earnings and chances of joining the top 1% of earners. Begin applying these business strategies now, coupled with intelligent automation in your internal business, and observe how your profit margins rise.