tucktech
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Pricing Model for charging for IT services
Hello experts, I wanted to get ideas of pricing models and what has worked best in supporting small and medium size companies. I typically charge an hourly rate but I have some new prospects that are a little larger and I think it warrants I create a new pricing model for Monitoring, Disaster Recovery and possible unlimited support.
I am not married to any specific idea, I want to understand different ideas, what works, what does not and why, etc.. any input is appreciated.
Thank you,
tucktech
I am not married to any specific idea, I want to understand different ideas, what works, what does not and why, etc.. any input is appreciated.
Thank you,
tucktech
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I'll throw this out as an alternative. What I'm about to explain is for typical managed services and in non-typical situations, you will have to have a different pricing model, maybe just hourly.
Our managed services pricing model is based on hourly with a goal to simplify the agreement.
When I meet with a new client, I ask questions about their environment. If it's typical, I tell them as a "rule of thumb", budget the (number of computers X 20% = minimum # hours needed per week). For example, if they have 20 computers, then it would be 20 X 0.2 = 4 hours/wk. Adjust the % as you see fit and remember this is a starting point. They may want more or less than the formula shows. The pricing model is a sliding scale, so the more hours they want, the cheaper per hour it is. The hourly rate is the same for any work we do, whether it's a desktop, server, network, etc. I know, this goes contrary to most service providers, but it sure simplifies things and not have to track what hourly rate it is, since you might have different rates based on what you're doing or working on.
The client is them billed once or twice a month (depending on total) and the same amount each billing. This is easier for the client to budget. Once you start, schedule those 4 hrs on-site, say Mon and Thurs, 2 hrs/day. They will soon depend on when you will be there and can collect their problems to be addressed all at once. I also like to be on-site developing a relationship with staff. Emergencies will still be dealt with as appropriate.
Now, keep track of your time including variance from the schedule. Some weeks you will be ahead of your scheduled time or some weeks you will be behind in hours, but over a longer period, say 6 months, it will probably even out. If you spend 5 hours one week, you may be there 3 hours the next - still averages to 4 hrs/wk. Over time, they still get the same total hours they agreed on and you still bill the same amount each month. If you ever get too far ahead or behind, the client will see additional hours billed or a credit.
The problem this alleviates, is keeping track of what's still in service ("under support") and what you're working on. The attitude is now, "I don't care what we'll be doing or working on, it's all covered for this flat amount." This also works best if you have staff that are "jack of all trades", so the client doesn't see a different person every time or have to wait for someone else to show up.
We also don't do contracts with a term. We tell the client, "If for any reason you don't like us, tell us to go away. We'll be happy to transition you to another vendor." We strive to be client-focused.
We also offer approximately 30% discount to non-profits (charities). It's our way of giving back to our community. Believe it or not, they are far less likely to default on an invoice than for-profits.
Our managed services pricing model is based on hourly with a goal to simplify the agreement.
When I meet with a new client, I ask questions about their environment. If it's typical, I tell them as a "rule of thumb", budget the (number of computers X 20% = minimum # hours needed per week). For example, if they have 20 computers, then it would be 20 X 0.2 = 4 hours/wk. Adjust the % as you see fit and remember this is a starting point. They may want more or less than the formula shows. The pricing model is a sliding scale, so the more hours they want, the cheaper per hour it is. The hourly rate is the same for any work we do, whether it's a desktop, server, network, etc. I know, this goes contrary to most service providers, but it sure simplifies things and not have to track what hourly rate it is, since you might have different rates based on what you're doing or working on.
The client is them billed once or twice a month (depending on total) and the same amount each billing. This is easier for the client to budget. Once you start, schedule those 4 hrs on-site, say Mon and Thurs, 2 hrs/day. They will soon depend on when you will be there and can collect their problems to be addressed all at once. I also like to be on-site developing a relationship with staff. Emergencies will still be dealt with as appropriate.
Now, keep track of your time including variance from the schedule. Some weeks you will be ahead of your scheduled time or some weeks you will be behind in hours, but over a longer period, say 6 months, it will probably even out. If you spend 5 hours one week, you may be there 3 hours the next - still averages to 4 hrs/wk. Over time, they still get the same total hours they agreed on and you still bill the same amount each month. If you ever get too far ahead or behind, the client will see additional hours billed or a credit.
The problem this alleviates, is keeping track of what's still in service ("under support") and what you're working on. The attitude is now, "I don't care what we'll be doing or working on, it's all covered for this flat amount." This also works best if you have staff that are "jack of all trades", so the client doesn't see a different person every time or have to wait for someone else to show up.
We also don't do contracts with a term. We tell the client, "If for any reason you don't like us, tell us to go away. We'll be happy to transition you to another vendor." We strive to be client-focused.
We also offer approximately 30% discount to non-profits (charities). It's our way of giving back to our community. Believe it or not, they are far less likely to default on an invoice than for-profits.
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