A large number of IT service providers are moving towards the managed services model, and away from a break/fix philosophy based on selling consultancy time.

Even if you are still committed to the traditional way of doing things, there are several reasons why the managed services model makes sense. Let’s look at a few of the ways in which the model can benefit your OWN IT business.

  1. By rolling everything you provide into one monthly fee, you guarantee fixed revenue from each client every month. This makes financial planning (and cash flow) more straightforward.

  2. This fixed monthly revenue maximizes the value of your company should you ever wish to sell it and move on, because a buyer can count on the revenue continuing to roll in.

  3. The managed services model allows you to package a range of third-party services (such as cloud-based backup and antivirus) and sell them on at a substantial mark-up.

  4. Signed managed services contracts with your clients protects you from times when clients decide to cut costs by reducing their IT spend. Often, under the break/fix model, customers who are going through lean times will neglect their IT infrastructures and leave things unfixed.

As you can see from the list above, there are some really compelling reasons to at least consider moving some or all of your customers in the direction of managed IT services.

Of course, if you decide to do this, there’s no point in showing clients the list above, which concentrates on how the managed services model benefits YOU, as the service provider. You must instead take an approach that ensures that clients fully understand the conceptual difference between managed services and break/fix. You must then convince them that managed services are a better option.

So, with that in mind, here are some pointers to help you explain the managed services model and convince your customers that it will work better for them.

  1. Explain that signing up for a managed services contract basically means that once the necessary hardware and software are in place, what you are offering is a service where, for a fixed monthly fee, everything is guaranteed to work solidly and consistently, with no costly surprises. Some IT service providers even go further and provide hardware and software as a service.

  2. Talk through how you will include supplementary services such as managed antivirus and cloud-based backup. Explain how this means that the customer will have fewer companies to deal with and fewer individual bills and payments. How exactly you will provide the services is up to you, but you will be looking for the perfect balance between reliability, ease of use, support, and potential for profit.

  3. Discuss costs in detail. Once you’ve amalgamated all the different services into your proposed offering and allowed for profit, it may be that the total cost seems a little daunting to your client(s). At this point, you need to go into the numbers in detail and make sure they make sense! Show the clients what they have previously paid out for break/fix support; show them how much they’ve been paying for annual antivirus licenses; show them the past online backup invoices. Most importantly, try to make sure that when they add all of those numbers together, they arrive at a higher annual figure than you are proposing for managed services!

  4. Explain to them how your own business works. If you have a client that’s reluctant to sign up for any kind of contract, make sure (politely) that they appreciate that contract customer have priority in your support queue when things go wrong.

  5. Make sure you highlight all the benefits that managed services clients enjoy. This is the time to mention things like proactive monitoring, patch management, and all the things you probably do anyway with little fanfare or complaint.

While the managed services model may not be right for all of your customers, it’s worth examining your client list and considering moving at least some to this style of IT support. It’s always good to have regular revenue you can rely on, and if you ever try to sell your business, it’s the first thing a potential buyer is going to ask about. 

And to follow through on the tips introduced in this short article, be sure to watch the Inbound Revenue Acceleration Webinar for Managed Services & IT Consulting.

Register to Watch the "Inbound Revenue Acceleration Webinar for Managed Services & IT Consulting" (Recording)


Related Resource:

The #1 Managed Services Pricing Mistake Most MSPs Make


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