Pricing models in the Managed IT Service and Support industry can greatly impact the success of any outsourcing initiative. In this article, we will examine the five most common pricing models used by managed service providers (MSPs) and discuss the benefits and drawbacks. Understanding the pros and cons of each model can help organizations choose the best option for their needs and goals. Pay per Ticket Model – In this model, the organization pays a fixed price for each ticket opened by the service desk. While this model can provide predictable revenue for the MSP, it may not be the most beneficial option for the organization. This is because it can incentivize the MSP to increase the number of support requests in order to maximize revenue, rather than focusing on reducing the volume of requests through effective problem resolution and proactive support. Pay per Call Model – Under the pay per call model, the organization pays a fixed price for each phone call made to the support team. While this pricing structure may be appealing to the MSP, as it provides a predictable source of revenue, it may not be the most beneficial option for the organization. This is because it can incentivize the MSP to extend call times in order to increase revenue, rather than focusing on efficiently resolving the organization’s issue. As a result, the organization may end up paying more for support than they would under a different pricing model. Pay per Minute Model – In this model, the organization pays a fixed price for each minute of support provided by the MSP. While this pricing structure may be appealing to the MSP, as it provides a predictable source of revenue, it may not be the most beneficial option for the organization. This is because it can incentivize the MSP to maximize the duration of support interactions in order to increase revenue, rather than focusing on efficiently resolving the organization’s issue. As a result, the organization may end up paying more for support than they would under a different pricing model. Additionally, this model can incentivize the MSP to increase the volume of support interactions, rather than working to proactively prevent or resolve issues. Pay per Agent Model – Under the pay per agent model, the organization pays a fixed price for each support agent on their team. While this pricing structure may be convenient for the MSP, as it provides a predictable source of revenue, it may not be the most beneficial option for the organization. This is because most organizations may not have the expertise to properly size their support organization or accurately determine the number of agents needed. As a result, the organization may end up paying for more support resources than they actually require. It is important for organizations to carefully assess their support needs and ensure that they are paying for the appropriate level of resources under this pricing model. Pay per User Model – The pay per user model involves the organization paying a fixed price for each user who has access to support. This pricing structure can be beneficial for both the MSP and the organization, as it incentivizes the provider to reduce support volume over time through shift left, problem management, self-help/self-service, automation, and machine learning/AI. These efforts can help to proactively prevent or resolve issues, leading to a reduction in the overall volume of support requests. At the same time, the organization is able to pay a fair price for the level of support they require, while the MSP receives a predictable source of revenue. Overall, this model can be a win-win for both parties. You have likely heard the term gain sharing, in which the MSP and the organization share in the cost savings achieved through improved support processes. Gain sharing is often mentioned in the industry but is difficult to implement unless the pay per user model is in place. Under this model, it is possible to see a reduction in volume (tickets and contacts), a reduction in the monthly or annual price paid by the organization, while absolute profits remain flat or steady for the MSP. Based on more than 30 years in the industry and thousands of managed MSP benchmarks, I can say with confidence that the pay per user model is the only pricing model that consistently produces win-win outcomes for both the MSP and the organization. It incentivizes the provider to reduce support volume over time, while allowing the organization to pay a fair price for the support they need.
