Smarter Pricing, Packaging and Systems in Increasing your MSP’s Profitability

All right, we will kick off. Everyone, thank you for joining us. This is our second MSPs in Conversation. The topic today is on smarter pricing, packaging and systems in increasing your MSP's profitability. Today we are joined by Aaron, Nigel and Scott. I will get each of you to introduce yourselves in a minute, but thank you for joining us.

Today's session is recorded and will be sent out afterwards, so if you do have to drop off, or you want to share it around afterwards, feel free. We have, if I can go to the next slide, for any MSP attendees that are joining today, we have a $25 UberEats gift voucher for you. Most of you should have received that already. If you haven't, please reach out to us in the chat and one of our team members will sort that out for you on the fly.

Very quickly, because we're not here to talk about Hosted Network too much, but very quickly: who are we? Who is Hosted Network? We are an Australian wholesale cloud and telco provider for MSPs. We started as an MSP way back when, and we very quickly transitioned into channel as we started building solutions for all these bits and things that you can see on the screen. As different IT companies started coming to us, we've been channel for what feels like forever now, and everything that we do, everything that we build, is all done with MSPs in mind. We're not a Telstra, we're not an Amazon. It's all about building solutions and working with you guys for the offerings that you have, and growing your success. Our partners' success is our success. We grow together. That's enough about that.

Meet the Panel: Rodin, TribeTech and The Tech Tribe

So, who are we joined by today? Aaron, Nigel and Scott. Aaron, can I get you very quickly to give a 30-second intro to yourself and about Rodin?

Sure. Aaron Jacobs, General Manager of Rodin. I've been with the company, this is, I've just clicked into my 20th year, where we manage about 4,000 seats, based in Wollongong, New South Wales, operating mainly across New South Wales but across the country as well. With no specific vertical, there's a lot of automation. Love what we do, and that's it.

Cool. And Scott?

Hi, Scott Atkinson, TribeTech. We've been in the IT industry for quite a long time, but I guess from about 2018 we decided, a couple of us, three of us, to get together and create the modern MSP, using everything we'd learned about not doing in the past 20-odd years, and seeing how we could go not doing it. I'd like to think we're reasonably successful in that, but yes, anyway.

All right, and Nigel?

So, I'm not an MSP. I used to be an MSP. I started in the MSP world in 2002 or 2003, I think it was, and ran an MSP for somebody else, ended up running my own for about eight years. I sold it in 2016, and now I run a business called The Tech Tribe, where we stole Scott's business name and flipped the names back, which is very confusing. We're thinking about rebranding ourselves, actually. In The Tech Tribe, we teach and coach and mentor and equip other MSPs, and help them avoid all the stupid stuff that I did wrong over the 15, 20 years that I was in the space. We've got a couple of thousand MSPs in there now, and that's what we do. Well, that's what I do.

Wonderful. Well, guys, thank you all for joining us. Two MSPs and an MSP expert on the line today. For the audience, if you've got any questions around the topic, which I will go to the next slide if I can figure that out, there we go, smarter pricing, packaging and systems, any questions, put them in and we will go through them as we can. But for now, I will stop sharing so you can all look at our lovely faces and kick it off.

Mindset: Why MSPs Undervalue What They Do

So, first parts first. Smarter pricing is where we're going to focus on now. We actually had some questions from the last session that we did. We talked a little bit about pricing and whatnot as well, but there are far too many MSPs that don't value what they do. It's a mindset thing, that they're charging too little, they're worried about their competitors, or those sort of games. We touched on this, but I wanted to focus on it a little bit more. So I'm going to start with Aaron. Aaron, how do you, a couple of tips, and maybe if we can just do one tip and rotate around to get started, get the flow going. What's a tip from you to help our MSP audience to change their mindset, to help value themselves more?

Okay, that's a very good question. Look, I mean, you just said it a second ago, you said they don't value it, and it's easy to do that. I see that in technicians coming through, I see that in other people. You're right, people get a little bit nervous about potentially charging a client for something, but you need to really understand that they don't have this in-house, they need this support. Generally, as long as you're open and honest about things, that's something that I really push, open honesty. Even when we have these difficult conversations with customers, just be honest about it. So if you do get in a situation, be honest about what you're doing, and then generally I don't find people have problems paying for things if they understand what they're getting and it's all just transparent and visible.

So don't write yourself off. If you are doing a project and you think the project's going to take you eight hours, and there's, well, no, let's do something a bit bigger, a 40, 60-hour project, and there's going to be eight hours of project management, put that eight hours of project management in there. Don't skimp out on things because you think people would be worried about it. You know, documentation, I think we spoke about documentation last time, Ben. Yep. That was a big one. People often miss charging customers for the documentation time. That's important. I know I'm talking about projects and not necessarily your agreements or your support packs yet, but you need to value, definitely value what you do. We've had a lot of success, especially recently, value-adding and doing different types of services, and people do have an appetite for that as long as they understand what it is they're getting, and you can always demonstrate value. That's a really big one.

Demonstrating that value, which there's a lot of different strategies to how you do that, so that's going to be a good topic for today as well, about value. But to keep going around, Scott, any tips to help MSPs shift that mindset? You've run big MSPs previously, and you're now running a smaller, leaner operation, not necessarily less profitable, but leaner. Any tips in terms of that mindset to justify your value?

Yeah, look, it does really come down to valuing your ability to deliver an outcome, I guess, and not a component. If you're thinking about how much would I charge to plug in a PC, or something simple, yeah, anyone could do that, in theory it should take 10 minutes, so you're not really valuing the true representation of what that's delivering. If you're saying, how much to solve this client's problem, which could really just be plugging in a PC, that's a whole different way of thinking about the issue, providing and looking at the broader element of how are we actually helping the customer or the client to achieve their goals. That's not an x-dollar-an-hour discussion, that's an outcome discussion, which allows you to be a lot more flexible about how you deliver what you're doing, how you actually price what you're doing, and at the end of the day how much money you're really going to make out of something. It's not to say you should be making a million dollars out of every client that comes along, but you should be making a respectable amount to be profitable in business, and to reflect the training and the effort and all the other systems and structures that you put in place to support you.

I think that's a really important point. There's far too much of a recurring pattern that I see in the industry where MSPs don't consider their increasing costs. You know, office, I hate, we don't have an office now, but maybe you do, and you're still stuck with rent, all these bits and pieces. Considering these different things as you grow, your rates need to increase. So I said last time, when I first started as an MSP I charged $40 an hour. It's a mindset change. I didn't value it. Obviously I don't charge that now, I wouldn't be able to pay for breakfast, my smashed avo and toast, and afford it. So, Nigel, any tips from you? I mean, you probably get this question a lot, so that's why I sort of left you to last, but go for it.

I see this question tons, and working with hundreds and hundreds and thousands of MSPs, you kind of see patterns behind all of this stuff. One or two of the big patterns that I see that stop MSPs from pricing themselves properly are both mindset-based ones. They're both around beliefs about ourselves and our self-worth. In our industry particularly, a lot of us are technical, we kind of self-identify as introverted, and we have sometimes beliefs about money and worth that project onto what we charge our clients, and it's often nowhere near what we could be charging our clients.

For me, in my particular scenario when I had my MSP, I had these horribly limiting beliefs around money and a scarcity mindset that I'd been given growing up, growing up in a family that had no money. Everything was, we didn't have enough money for TV, and we didn't have enough money for all of this stuff, and we always had to eat the same fruit, same meat and veg every night because Mum had to buy it in bulk and whatever. So I had those beliefs about pricing and money and value and worth my whole life, and as I went into my MSP I started projecting those beliefs into the way I did my pricing and the way I showed up for my clients.

It wasn't until one of my larger clients really called me out on it one day did I finally get some awareness around that. I had this client, I was continually making decisions on their behalf based out of my personal scarcity-based mindset, and they were horrible decisions. In hindsight now I'm going, oh man, that was just stupid. She called me up one day and goes, Nigel, you've got to realize, I want to spend this money, I want to invest this money. The way I've grown my business is by investing money like this, and you are not charging me enough. I'm going to have to go and find someone that charges appropriately so that they can do things appropriately, and we can set the systems up that we want. If you can't go and charge me appropriately, I understand that you're probably in a different space than me, but I want to invest this stuff. And that flipped my mindset immediately. That's when, ah, crap, I've put all my bad money beliefs onto my clients, and I've made some horrible business decisions around how I price my things and everything.

So to me, that's where most people start the struggle with. It's around our mindset and our beliefs, and often some of the programming from when we were kids about money and value and worth. To me, if we can start to look and take an objective view on the situation and really start to continually look at the value we are providing, like Scott said, looking at something based on the outcome and the value that we're providing that particular client, not the hour that we put into it or the inputs that we put into it, but the outcome that we're delivering that client, we can really start to see some real actual business value and some real dollars in there compared to using things like typical cost-plus kind of pricing models out there.

Good. Yeah, I entirely agree. It was only the other day I was having a conversation with one of our MSPs, and I actually said to them, you know what, if you go broke, it doesn't just impact you, it impacts your clients. Your clients need you to make money, because they need you. You'll be a charity, right, at the same stage. You've got to survive, you've got to actually be successful in order to continue supporting their business. And if potentially they're penny-pinching and whatnot, and they're not seeing value, it might not be the right fit.

From True Costs to Value: Justifying Higher Rates

Okay, so we've talked a little bit, I guess, about mindset. What are some other ways? So that's the first thing, mindset is the big one, your starting point. But in terms of, as you start adding more value into your smarter pricing, into your offering, what are some initial ways? Not ways that a year down the line, what are some of the very first steps that they can take to add more value to justify charging higher rates? So, Scott, any tips?

Well, part of this is also understanding your costs. If you're looking at how do I add value, and you're measuring outcomes that you're going to be delivering to a client, what are your costs in actually providing that outcome? If you're used to selling a PC at 10% or something like that, whatever the margin is going to be, don't necessarily assume that that's the same margin you should be putting on professional services or anything like that. When you're looking at what's the total package of all this going to cost, if you're doing something for a client that may save them a hundred thousand dollars, that client's going to be less worried about whether it's going to cost $500 or a thousand dollars, maybe even ten thousand dollars to do, because they're looking at the ninety thousand dollars they're going to save.

It does come into a value-based mindset, but make sure that you are understanding every bit of time and effort and other costs that go into what it takes to deliver your service, and make sure you've got a respectable margin on that. And a respectable margin is not what we've seen in hardware recently with, like, three, four, five percent. You can say, yeah, we're getting 10 percent, we're getting whatever, but that's fine, unless you're selling millions and millions and millions of dollars of hardware at quite respectable rates, I'm talking like 15 to 20 margin, you're not really making money on it. There's costs in even selling that much hardware properly that, really, unless you've got significant volume, you won't really be making true dollars in there. So it's not about product, it's really about what are the services we're doing, what's it cost to provide these services, what are my underlying overheads, and how do I put a respectable margin on that and then get a return for that.

Yeah, I think that with that in mind, also continuing to track that, because, as we sort of touched on, your business evolves over time. As soon as you had an extra headcount, all of a sudden your costs are going up, office rent, all these sort of things. So, Aaron, how about you, from an MSP's point of view, how can they justify charging additional, add more value to justify charging a higher rate? What early steps, maybe some things that Rodin have done?

So I was going to just touch on, I think Scott almost went there, you were talking about value and cost. I was going along more around the side of time, and focusing on the time that you save clients, which is a very similar thing, but a lot of people don't value the time figure. That's one that I see, and I'm pretty sure we've all probably done that at some point, is not put an appropriate amount of value on time. But it's also the customer's time. So you, we can focus on the small things, but even bigger things, and if you look and say, okay, we're saving you, you mentioned a hundred grand or whatever, 90 grand or whatever it was, they're not going to look at that, also think about time for them. So if it's going to cost them a staff member, or two or three or five, how much that actually costs, and then frame your pricing around that as well. So I think it's all relative in that regard. Ben, you're probably asking about steps internally for MSPs, probably, is that where you're going more with this question?

Look, there's a million different things. There's so many, and this is just about ideas, some takeaways that are practical, that an MSP can actually use.

Yeah, I guess, what are we talking about, are we going to talk about our monthly agreement prices first, or projects and more upfront costs? Because I think they're different. I think they all come differently.

Yeah, let's focus more around your support contract sort of side of it, the base piece of the average base piece of an MSP's revenue.

Yeah, for sure. So, look, we all, and Nigel, I actually haven't looked at your stuff, but I did actually mean to before this, and because it's been on the to-do list for ages, because I non-stop get recommendations about your stuff, so I just haven't got there yet. But we all have different calculators and formulas that we come up with to base people's support costs. But what I like to do, and again going back to that time reality thing, is think about, sure, your costs are this, you mentioned a cost-plus model, Nigel, that's very much that, right, okay, my costs for my agent software, blah blah blah, technicians, everything, and you put that in. But then flipping that and then looking at it as, okay, so if your support agreement comes out at 30, 40k, 50k a year to this client, whatever it is, okay, but how much is it for them to employ a staff member to do even remotely what you would do?

So if that's a level one, great, that's going to cost whatever it costs. If they're looking for someone with more strategic guidance, and they want to run reporting and ERP and all sort of strategy type, bigger stuff, well, think about what that salary is going to cost them. And understand what it is that the client is asking for, because often their definition, and I'm sure we've all been through this, their definition of technical support is everything, and our definition of technical support is not everything. It's not consulting, it's not always working. So, sure, but they're not going to hire an IT manager or CIO that wants to run around fixing printers and filling up the printer with paper.

Well, actually, funnily enough, I've come across many that do seem to get put in that role but love to tinker, and again that's the reverse of what I'm saying. So it's about understanding that, and then whatever formulas you come up with, taking that but then actually looking at your costs and saying, well, hang on, if this client had to do this themselves, generally there's a really big gap there, and I would say nudge further up towards that gap. So I guess that would be my obvious tip there, and don't sell yourself short on what it would cost them to put on at least one human, because the reality is, you as an MSP are doing a lot more than what one staff member could do for that business.

Talking the Client's Language: The Technology Business Review

Okay, so let's focus on, so Nigel, in that regard, have you got any guidance for MSPs that are looking to, I mean, you run a coaching program, so have you got any guidance to drive that value and show that piece of value?

Stop talking technical with your clients.

Yes, thank God, yes, Nigel, absolutely.

Talk plain English, jeez.

Exactly. And so inside our program we teach very heavily, we've got this workshop called the TBR Foundations Workshop, which is short for Technology Business Review. It's what most MSPs know of as a QBR, quarterly business review, but we never call it that, because I don't think I've ever met a single MSP in the world that's ever done them on a quarterly cadence.

So we call them a technology business, yeah, we call them strategic business reviews, you never run them quarterly.

But the thing is, and I was horrendous at this, I used to, everyone said go and do a QBR, because that was what I got taught back in the day, and so I'd go out to my clients and I'd sit with them and I'd talk about patch levels and antivirus status and backup status and all of this crap, all of this stuff that my clients' eyes always glazed over, and I'm always going, what am I doing wrong, what am I doing wrong? And I finally realized that I was talking not their language, I was talking my language, and they didn't value that, they didn't see any value in that.

So one of the things we teach our clients to help them figure out how to be seen and perceived in their client's eyes as a more valuable player in the business is to teach them to go in and have business-level conversations around this stuff. We call it the TBR process. Essentially it's just having these regular catch-ups, with some sort of cadence, with your clients, where you're going and you're asking them business-level discussions and questions, things like, what projects have you got coming up that we could figure out a technology solution to be able to help make better for you, or what are the current challenges in your business, or if you had 10 times the number of sales coming through right now, what's going to break first, so that we can figure out where we might be able to go and put in some things. And having conversations around risk and all that sort of stuff, that's where you really add tons of value to your clients, to their agreements, to the perception of you, because you're becoming a business part of their business, not just the tech part of their business.

Look, the days where you're troubleshooting Outlook issues and printer issues, and that's your value, it's not anymore. That stuff is commoditized, and it's a five, ten dollar an hour task. It's the stuff where you're in there becoming, and I hate this term but I'll use it, the trusted advisor in their business, where you're there and you're essentially a seat at their table, or their C-suite, where you're helping them understand how they can better leverage technology in their business, and you're helping them understand the risks that they've got, you're helping them understand the opportunities that are out there, and how they can innovate faster and execute quicker. And if you can bundle all of that inside your managed service agreement plans as a regular cadence, where you're not only doing all that baseline support, management, monitoring and all that stuff, but you're doing that business-layer conversation on top, that's a very easy way to start to stack that value in, and to start to be able to price your agreements at much higher prices than what you would have traditionally if you're just trying to resell monitoring and maintenance and support and patching and all that kind of stuff.

100%. And that builds trust, and the minute you have trust, the pricing goes out the window.

Yeah, but I will say, on that, it also takes time and confidence. You're not going to, if you're a techie by heart, which most MSP owners start off as a techie by heart, you're not going to go in day one and have these highly confident business conversations. It's a process, and you go through this journey where you start to hear from other people about what they ask, or you use a framework like what we use, and the more you do it the better you get at it. So if you're there going, I can't have these conversations at the moment because it just scares the crap out of me, I'm happy to default into tech, just know that you can, and it just takes tiny steps. The more tiny steps and the more of those TBRs that you actually have, the better you will get at them, and you will get to the point where you were far more comfortable having these high-level business engaging conversations with your clients than you ever were caring about all that tech stuff in there. It just takes some time and intentional progress moving forward doing it.

Interesting. One of the books that I actually make a lot of our, well all of our team read, on the sales and marketing team, is The Challenger Sale, in that sense. So don't just be their best friend. Just because you answer emails doesn't mean that you're providing any value. Understand their business, understand what pain points they have, so that you can talk to them. It not only helps you win new business, but it helps you grow existing business.

Choosing a Niche: Verticals vs Horizontals

That leads me into the next piece of this, which is verticals. And Scott, you and I have talked about this a few times, so this is one of the reasons I wanted to have you on the call today. Not a lot of MSPs talk verticals, and Nigel, to your point of being able to have a business-level conversation, if you've got 50 different industries that you're supporting, understanding 50 different industries' pain points is a lot harder than targeting a couple of verticals. And I don't see a lot of MSPs that are targeting verticals. We had James from Teamwork Technologies on last week. He targets dental, and that's worked quite well, but it allows them to have a tailored conversation. But we really don't see that very often, these MSPs actually targeting. Scott, you're one of the ones that I know that do target a particular industry, so I wanted to ask you, what's the why, from your perspective, and what are some of the challenges that you've had with targeting particular verticals?

It's an interesting question, because we built our offering, we took it to market, we figured if we're going to just be everything to everybody, then we're going to essentially be nothing to no one, sort of thing. So we looked at some verticals and we said, look, let's go after this one and this one, and maybe even a bit of that, and just say let's focus on that and say we've got clients in the space, we've got industry experience, we understand the business models, we can have those business discussions a lot more, because, as we've just sort of said, it's not about the technology really at all.

And we learned a lot, I'll say that. One of the verticals we started looking at was medical, because we figured, look, there's all these doctors out there, they must need IT. And the problem is, we actually found, in talking to a lot of them and even getting some test sites up and running and engaging with the doctors, they're quite happy to spend a million dollars on the next medical gizmo that comes along, but they're not willing to spend a dollar on antivirus.

Yep, I was going to say, doctors, how much is a phone call, how much is it, we're not here for that, that's not what this is about.

To the point where we actually just don't chase that vertical anymore. We specifically exclude it, because we know it's going to be a time-waster for us. But I'll also say that in our attempt to focus on verticals, we achieved the exact opposite by mistake, and it seems that every new client we seem to come across is in an area or a type of business that we haven't done before. So from trying to attack one vertical, we've done this. I'm not quite sure how to put that into a success form.

No, well, that's interesting, because that's what we sort of see in the market in most cases. It is this sort of diversification, which is good from a risk point of view, but it makes the sales conversation harder, it makes that standardization conversation harder.

So I would flip it, Ben, though, and not target a vertical and avoid certain ones, which is what we do.

So let's back some industries here. What are some industries that we should avoid, guys?

Retail, doctors, legal can be tough.

Ah no, I like legal, but yeah, we had a few good legal ones, but we also had some horrendous ones.

Yeah, yeah. It's the retail, the point of the clubs can be good and bad at the same time. We've found some clubs really need infrastructure, other clubs, they're like doctors, and they're also just very 24/7 and needy at the same time.

I've got one from Brendan here. He's sort of said that your niche doesn't have to be a vertical, and Brendan, you're entirely right. It really doesn't, it shouldn't. This is more along the lines of, should you or could you, target what are the benefits. And in terms of focusing on things, Brendan sort of said in the chat here, targeting a particular platform. I see, we've got a lot of partners that, like, we talked legal for a second, I think it's Leap, it's one of the legal pieces of software, they're in that sort of partner network, they're aligning with vendors to provide support, tap into that ecosystem. That can be a vertical as well.

And I guess that's a horizontal, normally you'd call it. So vertical is typically when you pick the industry's needs, and then you go horizontal niching when you're going across, you might pick like an ERP solution or something.

Good one. I'm going to call it horizontal. On that same subject, we've got a question from Ed here as well, let me just read this question out. "I appreciate the rationale for value-based pricing, thanks to the book from Nigel. Are there any verticals that are better suited for productization of MSP services? For clients in industries like events and hospitality, managed services don't fit properly."

Yeah, I would say professional services are the big ones, so legal, accounting, those types of ones. They're the biggest ones for us. Aged care, not-for-profits, I know not-for-profit's more of a category that goes across a lot of different verticals, but those community-service-based things. We recently did again a sort of categorization of how many we have in each vertical, but also which ones are more profitable and brought in more revenue, and that's a good exercise to do if you guys haven't done it.

Yeah, oh, that, you know, you're a generalist and you think you're across every vertical, sometimes the results can be quite surprising when you look at both revenue and then also profitability across those different industries.

So, interesting one in terms of actually reviewing your existing client base as well. I think most people lean towards the vertical naturally over time, maybe not in day one if you've only got a handful of clients, but over time you typically get referrals, you get that organic growth, and you tend to, so if you look at your existing customers, you probably maybe have a handful of clients in a particular vertical.

We've got another question here. Someone's asked, what about education, do you guys rate education as a vertical to target?

It's got nuances, but absolutely, it's got money too, and high volume, massively high volume if you can get in there. But it does have its nuances, and it's one that's very, it gets very heavily weighted towards Google, because Google have hit the education market like crazy. A lot of Microsoft partners struggle in the education space just because of the, which is the majority of MSPs.

Correct, majority of MSPs are a Microsoft world.

So, but it does have massive volume, and I've got a bunch of clients that target education very well. They're Google companies, and they target it very well, and they'll go out and get these 500, 800-seat schools, where every single one of those students has got something that gets managed, their laptop or whatever. So they have these massive contracts around mobile device management and everything as well in there. But it is typically different to the accountants and the lawyers and the doctors. You're typically seeing two different business models in there. High volume, that's the whole thing.

And if you've got an offering that's very targeted towards, say, up to 100 seats or something like that, trying to implement that offering in a larger corporate, or in, you know, 50 schools or something like that, it's not going to work. You've really got to target and design those offerings to be a fit to that client base.

Correct. And as you said, managing laptops and things like that, it's very much a volume, commoditized thing. No one's going to pay hundreds of dollars or whatever per device a month just to have a student laptop managed, it's just not going to work. So you've got to work out how can you do that and provide a bit of value in there that's going to be seen, for a minimum cost that's going to be affordable in that model. It's hard to find the mix, but once you've done it, copy and paste, reproduce it.

And there are some caveats, like for example Nigel mentioned, it's typically different business models. Like Bec, for example, just mentioned in the chat, sometimes with school or education or governments, for example, where you've got those larger contracts, you do need to go and tender before them. You know, state, federal level, etc. So it's generally a different business model going after that level, versus, typically, SMB, from what I see.

And you also, dealing with government is a very fine art. You've got to be on panels and things like that, which you've got to apply for, so it can be a headache in that regard. Very lucrative though, when you do get the right deals.

Correct. And it's a bit of a numbers game, in the sense of, it's like cold calling, the more tenders you do, you're eventually going to win, but you've just got to be patient, you've got to really pursue.

Yeah, I'd rather do cold calling.

Yeah, for us, we steer away from it, we just, yeah.

Well, Aaron, you and I have had some conversations around tendering before, and that was some of your advice as well. The technicals and that whole government ecosystem, for us, we've just decided, no, it's not worth the effort. As you said, you've got to do lots of them, yes, it can be lucrative if you get them, we just prefer to do what we do well in a different space.

So you could target it, it's probably just going to take additional effort to target those versus, let's consider them not low-hanging fruit. And if you've got a network in that space first, then go for it. But if you don't have a network in there, because it's very network-driven, it's who you know, not what you know, in there, if you don't have that network, then approach with caution, because that whole tender process is very, very heavy in there.

Yeah, definitely. Just because it can be lucrative, it doesn't necessarily mean you should chase something.

Yeah, that's right, if you're not set up, it'll fail hard in your face.

So, yeah, definitely go for a way after where you're good and where you can add value, where you excel, know what you do well and chase that.

Why and How to Package Your MSP Services

All right, cool, thank you guys. Let's shift a little bit, so we're going to shift into the packaging component of this. So we've talked a little bit about pricing, and now we're going to go after this. So, why do we package? Very quickly, for those of those there might be, we've probably got some break-fix still on here, we've got a few people. Why do we package? Nigel, I'm going to direct this one to you. Very quickly, in your words, what are the benefits, and why should we be looking at packaging our offerings?

It's much easier to sell a chocolate cake than it is to sell all the individual ingredients. If you're out there trying to sell sugar and sell flour and sell all these different things, you've got to come up with a marketing strategy for each one of those individual products out there, and support and everything. If you can bundle it all together and sell the cake, which is really what the person wants on the other end in a managed service deal, it's just much easier. And so to me, bundling and packaging your things in the right way, in a way that presents it so that it's very buyable for the person that wants to buy it, is the most important part of putting your plans and your offering together. That's why I wrote the damn book on it.

But what I will say is there's no one way to do it, and there's pros and cons of many different ways out there, and there's different nuances of all the different ways. You guys and girls on the call will have all heard of the per device and the per user and the per experience and the per poke-your-finger-in-the-air-and-see-what-way-the-wind's-blowing as you come up with the pricing. There are so many different things out there, and they are all right and they are all wrong at the same time. They've all got their little bits and pieces that work.

But the way you want to present it, like, I love the whole good-better-best strategy for most small to mid-tier MSPs. As you get further along in your maturity of an MSP, and understanding your costs and your margins in there, you can start to reduce that down to perhaps one or two offerings. But the good-better-best is very good for as you're getting started out there, because you can present a suite of different offerings to your client, they get to do the buying, they get to go shopping out there, and instead of them going and shopping you against your competitor, they're going to shop your plans against each other and figure out which one they want to go for.

Obviously, though, good-better-best has its pros and its cons, and so there's also a lot to be said for just having a single offering out there. But you do need to have a certain level of sales confidence and sales maturity in your business, and a deep understanding of your cost, before you can get to that single-plan offering as well. And then as to whether it's per user, per device, per whatever it is, there is so many different nuances to every single one of them, and there is no right answer out there. The right answer is what works well for you and your marketplace, and what you can sell to your clients out there.

Not what your competitor's doing.

Correct, not what your competitor's doing, not what Joe Blow down the road is doing in their MSP, because if you go and blindly copy him, not understanding his business and his cost and his marketplace and his sales confidence and his business maturity, then you're going to fall flat on your face, just like I did a thousand times as I tried to copy everyone else that I saw when I was doing my own pricing out there.

And that's what we, I guess, still see today, is that we see far too many of our MSP partners that are looking at their competitors, and they're using that as the benchmark, and that's not the right way to go.

Not to mention it's going to be demoralizing.

But not, that's right, yeah, but use it in the right way. Don't let it get you down, use it to motivate you to look at other things, not necessarily change your whole business approach.

So, Scott and Aaron, in terms of, I guess, packaging. Scott, could you just tell us your approach to packaging? Nigel just mentioned a couple of different options there. Do you do a good-better-best, do you do a single offering, what's your take and why?

We have a single offering. Everything that is realistically needed, we have in there. And it's without being excessive, but also not leaving a whole bunch of stuff out. We generally tend to focus on outcomes, so the package includes the outcome, and then we're responsible for everything. It avoids all the conversations around, oh, how much is this element, and why did you use that, and could I try this brand, or no, I want that coloured phone, or whatever. We just don't want to go there. That's not value, it's essentially time-wasting at the end of the day, for you and for the client. You don't hire an electrician to come in and then tell them what colour cable to use inside your wall, and how thick you want the wire, and can you bend it twice this way, before you go out there, and yeah, they're just going to leave. So really, it's the outcome you're after, and we bundle everything into the one offering to provide the outcome. Then we engage more strategically at a business level to provide bigger outcomes on top of that.

And, interestingly, that approach is one of the concepts of how Hosted Network was born. Back when we ran our MSP, we actually had the trademark Office in a Box, and that was the approach. It was kind of like everything that you needed and whatnot, and that's how Hosted Network evolved into channel-only, providing all those bits and pieces to fill those gaps.

I think the clients have evolved a lot as well. You go back 10 years, and the clients would have happily talked to you about, I need antivirus, I need this, or I need this type of PC. They know a bit more about it these days, because it's become so commoditized. They're more interested in their business than they are in the technology. They need the specific parts of technology they need, they just want to know it works, it's not going to have problems, and if it does have a problem, it gets fixed relatively quickly.

Okay. And Aaron, what about Rodin, what's yours? Do you have a single offering, or good-better-best?

No, single offering. I don't like good-better-best too much. There are certain scenarios where it can work, but for me I don't like it because of the internal complexity. I'm pretty big on, what you do for your client also has to be good from an admin perspective internally, and trying to keep as efficient and non-complex internally. So there's nothing worse than having customer A on the gold package and customer B on the bronze package, and then a tech's trying to figure out what to do with this, because, oh, hang on, did we not deploy it to them because they don't have it? No, because they didn't buy, oh great, how am I meant to know that? It's a pain in the ass. So that gets, I don't like any of that. So, yeah, single offering for us.

In terms of billing it to the customer, I don't know if you're really asking about that stuff, Ben, in terms of if you want to get into that nitty-gritty of per user.

Well, it does come into it. You know, whatever you go down, you still need to be able to bill it, and we touched on that a little bit last time.

From our offering, though, it is a single offering. But, funnily enough, if you mentioned Scott's evolution and 10 years ago and things like that, our single offering is great, and then there are some line items as different things change in the industry, we might bring those things in, but that gets reviewed over time. Nowadays EDR and all these other things are starting to come in, so that might become the new default standard, and so when we're going out, that becomes the standard, but then we have some others that we have to uplift. And so when we review their contracts, or whatever the case may be, that'll shift up. So, yeah, we do try and align it and make it as easy as possible internally, for both documentation, sales, tech, all of it.

So can I just chime in with something, that Aaron made a very good point around the differentiation and complexity behind good-better-best. If you are going to approach or use that model, and I see far too many MSPs separate their plans based on highly complex things like SLA response times. So they might say, hey, in our good plan you get a two-hour response time, and in a better plan you get a one-hour response time, and to me that is horrendous, that is the whole wrong way to go about it, because you're introducing this horrible complexity into your service desk. If you're going to look at it and want to do some sort of good-better-best model, consider something like, in our good plan we include all remote support, in our better plan we include this amount of on-site support, in our best plan we include unlimited on-site support, where it's very easy to manage that inside a PSA system. But if you're going to do all these highly complicated hour-based SLA things between your plans, you're going to fall apart in the back, and you're not going to be able to support them. So if you do do it, you have to make it simple.

We literally have the same SLAs for everyone. Yes, 24-hour unlimited support, on-site, offsite, doesn't matter, because there's nothing worse than trying to, uh, this, dog's drama on Saturday, do we have to tell them it's billable, I can't remember, do I go on site, no, go on site, fix it, don't worry about it, that kind of stuff.

Good-Better-Best and Managing Security Risk

All right, so I'm going to, the good-better-best, in terms of, is it risky, in terms of today's threat landscape, things like this is a little bit of a security risk, cybersecurity, like if you're excluding something from a good model that you're including in your best model, and all of a sudden they get done?

So, yeah, recently risk can be drawn out easily on contracts, but the risk is that you lose the customer, because they say, well, why didn't you sell me that one, and you go, well, we tried, you were too cheap, that conversation is never going to go well. And then it's too late, now it's happened. So it's all about being honest. So, yes, yes, it's risky, it's risky for a number of different reasons and avenues.

So did you have any recommendations in terms of mitigating potential risk of, you know, entry level, because as a smaller MSP, getting customers and revenue in the door and getting that first step is important, and sometimes cost is a barrier to entry.

Yeah, sometimes good is the only way to get them in the door, that's right. And that's fair. But there's a risk component of that, and a lot of smaller businesses don't look at risk. It's, hey, it'll never happen to me. I mean, we say it with our clients all the time, we're not going to get hacked, we won't worry about this. But we do it ourselves, day in day out. We're always taking risks, and it's just human nature. We cross the road, are we going to get hit by a car, no, I'm not, I'm going to cross the road.

So how do we mitigate risk, particularly if you look at, say, the US market? They're very litigious, and we're a couple of years behind, typically, the US. So in a couple of years, I'm expecting that we're going to start to see, hey, MSP's getting sued, because that's it. So, good, how do you protect that?

So there's a couple of different things that you can do to start to protect yourself. Number one, of course, make sure you've got proper insurance in place that's going to cover all of this stuff, not just your PI and PL, but making sure that you've got cyber insurance on top of that stuff. But, as you're going through that sales process with your clients, if you do have a good-better-best scenario, don't make your good scenario lacking. Your good scenario should be still a minimum of what a client should have out there to cover a proper security posture, a security stack. Don't remove stuff to make it, try and get it.

Don't remove their antivirus.

Correct, don't remove anybody's, you have stuff that's just on top, that's different. But what you can also do, if you've got, when you're out doing that selling, I always, whenever I had some sort of good-better-best offering that I was out there, I would make my client down-sell me from the top. I would say, like, of course our number one thing here is that, our preferred is that you're on the top, because of A, B and C, and if you want to sell yourself down to one of these ones here, here's the risks that you're going to include into your business, or here's the problems that you're going to have, or here's the things that you're going to be missing. And I would let them make the decision to down-sell, so that at least they then feel that they've got the responsibility of that decision being made, not me.

But in the US, there's lots of MSPs nowadays taking in declination of service letters. So they're a legal letter where they're literally getting the client to sign off on the risks that they've introduced into their business by declining a level of service in there. And even those, in the US, are not even being held up in court sometimes now. But what they're doing is at least setting an expectation with the client that they've got to take a level of responsibility in their decision-making here.

And sure, ultimately all of us want the client that wants the top plan out there. Everyone wants just all of their clients to have the top plan and the top offering. But the reality is, in every marketplace around the world, and every MSP around the world, it's not possible to do that, because we're all at different levels of our journey, and different sales confidence, and all that kind of stuff. So you sometimes do have to take people at a lesser level than what you would really want them to be. So if you can protect your rear end by some of that education in there, and helping them sell themselves down, and helping to sell you down on the plan that you want them to get in, as well as things like declination of service letters or whatever it happens to be, you can start to go a ways in trying to reduce some of that risk in there.

But a lot of it is just education and proper communication around it. And by education, I don't mean going in and saying, hey, you need antivirus because you need to stop this thing and this. You need to go into the whole education piece, learning and mastering telling stories and using analogies with clients so they really understand what you're actually talking about. Not going in and saying, you need antivirus, blah blah blah, but pulling it out and talking to it on some sort of level that they can understand. Like, everybody uses the house analogy. Antivirus might be like having an alarm system at your house, and the door locks are like having no admin rights, or whatever it happens to be. And if you can use that education piece by telling stories and becoming a master storyteller, you really help your clients understand what those risks are, and most of the time you'll end up seeing them make better decisions and move their way further up to buying the services that you really want them to buy. But if you're trying to do it by features and benefits, most of them will glaze their eyes over, and you'll have a hard time selling them on.

Great, that's fantastic. And from my personal experience as well, the business language of telling those stories, even if you're not a great storyteller, if you start doing it you will evolve over time.

Absolutely. And you'll get to the point that your story can actually, it's dynamic, you'll know which pieces to bring into the story, the analogy, you build that up in your repertoire. It's another tool in your tool belt.

And it is hard. But leverage the community. I saw one the other day, the risk sandwich, do you want to eat the risk sandwich? And I was like, okay, that's very visual, but it's stuck with me, and those sort of things, those little takeaways. It's not, oh yeah, this, I don't know, the good plan has an SLA of 10 minutes or whatever it is.

Building an MSP-Friendly Technology and Security Stack

Okay, so, we are, sorry, I saw some messages, I literally read, 10 minutes, we've got 10 minutes left at one hour. We usually go over a little bit, but we will kind of move into the next section. I think we've really talked about providing value a lot today, so I did want to talk about that, but I think we've kind of covered that, and I feel that that is a key direction that you guys would recommend to the MSPs in the audience, to focus on that.

So let's shift into, it's partly value, but the all-important technology stack. Last week we talked about your operational maturity, in terms of the different areas of your business. If you were going to have a complex pricing model, you need the PSA to bill it. That was the systems that we talked about. This week, today, I want to cover more around the actual tech stuff, for the nerds amongst us, the more fun stuff. So we talked last week about your documentation and things like that, like IT Glue and whatnot, whereas today it's more along the lines of, not so much what vendors, and feel free guys to talk about vendors if there's a particular one over another, just give a reason if you do, but what are some of the important pieces to include in a technology stack? If there's people out there looking at providing more value, they're looking at going, okay, I've got some gaps in my technology stack, what are the fundamental pieces at a minimum that they should be looking at considering? Scott, can I ask you, from your side, what you guys...

Yeah, look, it's really the whole bucket. If you're going to a client with a managed services agreement, aren't you really saying, hey, we are here to do that IT piece for you, you go focus on whatever it is you do? So match that to that client hiring a person or a group of people internally to provide that role. What decisions would those people need to make? That's really what you've got to be balancing that out against. You know, Aaron, I know you mentioned earlier about looking at, if that person had to, if the client had a higher-level one resource or whatever, yeah, there's a value to that, there's also a bit more that says that level-one resource is generally the one asking, what do I do next, and how do I do this, and what brand should I buy. There's a strategic level that needs to go with every level-one resource, to give them guidance and to help fit that into the business, otherwise it's just a loose cannon walking around, in some cases causing more damage than they are helping.

If you've got 15 different security vendors, you've got to train your whole team on 15 different security vendors.

Well, that's it. And, look, the thing also is there's a lot of shiny objects out in the industry, and there's a lot of vendors ringing up MSPs going, you've got to use our bit of software to do this, or we've got a great gizmo that does that. And they all look really good, and they all solve these little niche problems everywhere you look, oh, that's great, and all of a sudden, if you're selling, let's say just for a random number, $100 a user a month, not that that's a realistic number, but if your costs by having all these vendors in your package now add up to $120 a month before you even made any money, you're not going to make any ground on it. You've got to be realistic about what it is you're trying to cover, and then set a barrier for what you're willing to pay in cost, because the rest of it's your margin. And just make sure you're not trying to satisfy every vendor that comes out. Ultimately you're trying to make money for yourself.

Yep, 100%, that's why we're in business. So, Aaron, from Rodin's perspective, are there any specific tools that you include in your tool stack?

Yeah, for me, and, yeah, types of tools, or tools, I don't mind naming them, but for me, look, you need data. You need data, data, data, data, for days. So whatever agents you have out there, whatever you're using, you need to be able to collect that data and run the reports and pull the data. Going on to what Scott was saying, hiring those people and showing them, so the last conversation you want to be having with your client is saying, oh, we didn't know that, because we couldn't generate that report, or we couldn't see that. You talk about showing value, they want to see all this stuff, they want to see the warranty ages and stuff like that. Sure, they don't always want to see that, but there does come a time in those conversations where they do want to see that data, and that's where you start to show value, and strategically showing that things are out of age, and whatever it is. But inventory is huge, and automation is my absolute number one piece. So automation is becoming a huge thing, and Scott, you obviously spent a lot of time doing that kind of stuff. But really, you've got this print nightmare rubbish that comes out, and you need to change registry keys or do whatever it is you need to do on 4,000 machines a second ago, you want to be able to do that, and you don't want to have to muck around. So don't skimp out on tools that don't have everything you need.

Yeah, it's all about saving time.

It's absolutely about saving time, yeah. And then there's lots of different things that you can use. I could name a huge amount of them, and all the dramas with them, and all the pros and cons, but I won't do that, you'll get me riled up if I do that. But, yeah, absolutely, it's about inventory, data, and then that monitoring, automation level is huge.

Okay, and Nigel, I guess this is something that, when you're helping MSPs build out their offering and improve their offering, that you'd be having conversations with regularly, from a technology stack, what do you consider the minimum basics that are needed?

I get so damn jealous when I look at all the tools that MSPs have access to nowadays. When I'm talking to clients and they're going, oh, there's some awesome stuff out there, there's some amazing stuff out there nowadays, and my geek gets fired up whenever I see these things. But shiny objects, that's a whole other.

It is true.

But I just want to zone down just on cybersecurity just for a moment here, because it's obviously the flavour of the month out here, and it's one of the areas that I see a lot of MSPs under-utilizing and under-stacking their tech stack at the moment. And to me, gone are the days where putting on antivirus and removing admin rights was enough of a tech stack around your cybersecurity stack. There are so many more awesome tools out there nowadays. And you've got, we've got the frameworks, like in the US they've got NIST, which is their cybersecurity framework, out here in Australia we've got the Essential Eight. And to me, every MSP out there nowadays should be looking to these frameworks like NIST and the Essential Eight, whatever they are, and figuring out what parts they're missing in their cybersecurity stack in there that they need to start putting in. So things like persistent threat hunting, or SOCs, and SIEMs, and MSSP partnerships, and all those sorts of things, are things that MSPs really seriously need to be considering adding to their stack.

And, no, you're not going to be able to add them all overnight, but what you should be doing is taking this continual incremental approach to putting in either new tools or going deeper into the current tools that you do have in your stack, because there is some darned amazing stuff out there. We, for instance, in The Tech Tribe, we use things like application whitelisting, we use DNS filtering, we, like, even VPNs we don't use anymore nowadays, we're using global CDN networks and everything, just to use all of these amazing tools that really do increase the security posture of us and our users immensely compared to what it used to be.

So to me, if you're looking for some tools to add to your stack, and you want some shiny objects to go and look at, go and figure out the gaps that you've got in your cybersecurity posture out there, based on whatever framework you want to go and align with. And I personally believe that NIST, which the US use, is very powerful and very good. You can go and you can see all the categories there of different tools, and they've got these great, very detailed diagrams that you go and look at, but you can see all the different tools that you really need to start considering putting in your stack. And you need to right-size that for your marketplace as well. If you go and add every single one of those tools into your stack, as Scott said, you're probably going to be selling a $110 product that's costing you $120 out there. So you've got to right-size it for your business. But I see big gaps in so many MSP cybersecurity stacks out there, and I think it's an area that most should start to focus on, and at least put some continual dedicated time into it every single month, with your team as well involved in the process.

One thing I will just toss in there, when you're looking at what am I going to add to my stack, make sure it's something that's MSP-friendly. And by that I mean, it's got a common console, it's licensed for every client. Rather than create all of your techs in every client instance, and then one person leaves, oh, hang on, someone's going to have to go in and take all their rights away, or something, oh, it doesn't report back to a central... We've gone way past the stage where we have to buy separate products that may even be larger than the client needs just to service each individual client. There's a lot of MSP-friendly tools out there that work on actual usage, and you can scale up and down, and they've got multi-tenant management portals, and they integrate with other tools you use. That's where your efficiencies are going to come from. You may think that, oh, this one's a dollar more per user or something like that, that's not great, yeah, but if you end up having to hire an extra person just to manage it across your entire environment, that's where your real cost is going to be. You can automate these tools, they're not that expensive at the end of the day. So you've done well, just look for the MSP-friendly ones. The vendors that don't have them, okay, that's it, you don't have what we need, thank you.

Yeah, I think that's a really good point, Scott, because a lot of the vendors that don't, aren't, the MSPs aren't their target market. It's typically enterprise, and if that's the case, then they're not a good fit. The guys that are MSP-friendly are typically going to be more SMB-friendly as well, which means the features and the price point are going to align. You mentioned the subscription approach of, scale up, scale down, versus, and I'm thinking some of the security vendors, because Aaron and I were having this conversation, I think, last week, security vendors that do perpetual license, Scott, you and I have talked about these security vendors as well, same thing, there's certain security vendors out there, they're like, cool, big-ass quote in front of you, you can't just consume it, and that's harder for the client as well.

Continual Incremental Improvement and Next Steps

So, all right, guys, we are at time, but I'm happy to stay on for a couple more minutes. Does anyone have any questions that they would like to throw into the chat that we can cover? Anyone want to talk detail on tech tools, yeah, detail on tech, so if there is any particular areas, we did last week, we went over a little bit too much, so I'll try not to, we got a little bit too excited and too carried away.

Well, while we're just waiting for this question, I just really wanted to highlight something that Nigel said there, because I know after these webinars everyone gets really amped up and everyone's really excited with, like, you know, a thousand ideas. But when Nigel mentioned just before, not all of these ideas have to be implemented today or tomorrow. It's actually probably a lot more, I suppose, better to look at this and try and plan it out, and realize that you can implement little parts of this as you go along. So you don't have to do everything tomorrow. I'm sure after everyone logs off the webinar they're going to go and fight other fires. But just, you know, schedule yourself in, make sure you're working on this stuff regularly, weekly, fortnightly, monthly, doesn't matter, as long as you're working on it, rather than just pushing it to the too-hard basket, and then you get down the road and you go, oh, god damn, I wish I would have, I wish I would have changed the pricing three months ago, or we should have implemented that technology stack, we just started it, it would have been...

Correct. Sorry, one of the sayings that we have at Hosted Network is, don't let perfect get in the way, don't let good get in the way, done.

One of the big things that we had in our MSP, as well as in The Tech Tribe, is that it's a continual incremental approach that we are taking to security. We don't have these wildly huge big projects that we dive into once every six months to increase it. Every single month inside The Tech Tribe we pick a security initiative to implement, and we've been doing that for years now, and for years at a time. If you keep that kind of continual incremental approach to increasing your security posture, or improving your automation, or whatever it happens to be, you make massive strides over time. But it's that continual incremental cadence. That's why Kaizen theory, the whole continual incremental improvement process that Toyota coined back in the day, had so much power in it, because they were always continually, incrementally making minor adjustments and marching forward. And lots of people underestimate the power of those minor adjustments and those minor little things that you work on. But if you make it part of your company culture that we're continually going to be doing these things, and it's part of our every day, we don't wait for three months till we've got some time to do it, we're continually doing it, and we're continually doing small things, you will be surprised after a year or two the crazy amounts of output you've been able to have.

Agreed. And, look, I think with that in mind as well, something that I regularly see is, it's communicating within your team. Some people, it can be especially true, techs can be scared of change. So how you manage that, you know, if you do one big change in training, you don't need to necessarily do that, but if you continually, and just communicate and whatnot, you'll avoid a lot of headaches when you do that. And if you prep the people up, there's that saying that goes, the right people on the bus in the right seats. If you've got those people working with that right mindset, then as you scale, it's going to be a much smoother approach.

So, guys, we are at time, so what I'll do is I'll just quickly share my screen, and we'll just talk about the next one, upcoming events. So we have our next MSPs in Conversation, which we will be talking about, so driving value in your MSP, adapting business frameworks. So MSP frameworks, we're going to be talking about the true methods, the EOS models, those sort of things, and we've got, I think we've got Aaron back for EOS, and Dan Williams from, yeah, EOS expert as well. So that is on the 31st. The events page is on our website, the link is at the bottom there, free to attend. We all have the same UberEats voucher, so join us for lunch, lunch is on us. Beautiful.

And the next one will be on MSP workforce management. You know, is it time to hire, fire or train your staff? A bit of a challenge, it's a hard thing to get your head around, so join us for that one, that's on the 16th of September.

Now, quickly, feel free to ask any questions. I'm sure you guys don't mind staying around for a couple more minutes if you do have any. We do have a couple of questions already. But I do want to just say, we will be sending out a copy of Nigel's book, so there you go, do some self-promotion, Nigel, get it and read it.

That's my promotion. It's actually, even for our team, we make it part of our required reading, one of our books. It's worldwide, not too long, and there's lots of really handy takeaways.

We will be sending out a free copy to all Australian MSPs that attended today.

It helps you go to sleep at night if you struggle with insomnia.

Yes, I need that.

Beautiful. All right, so what we'll do is, I'll stop sharing now. Thank you for joining us. Luke, if you want to stop the recording as well. Thank you for joining us, guys. Scott, Nigel and Aaron, thank you so much, it's been an absolute pleasure having you guys on the call today. And yeah, so thank you. We do have a couple of questions, just to wrap up, if anyone wants to stick around.