It’s challenging for MSPs to stay profitable in today’s business environment due to rising labor costs, evolving customer expectations, and fast-changing business and compliance requirements. Here are some ways to grow your MSP by ensuring profitability in 2022 and beyond.
7 Ways To Increase MSP Profits
Profit equals revenue minus expenses. You can increase your income and/or reduce your operating costs to raise your profitability. Here’s how:
1. Add High-margin Services To Your Offerings
Simply offering the basics such as remote monitoring, business continuity, and security may not be enough to stay competitive as more customers seek additional solutions from their vendors to consolidate their IT services.
For instance, many companies need unified communications (UC), desktop as a service (DaaS), and tools to support a remote or hybrid workforce. You can add these high-margin services to your offerings and upsell or cross-sell them to existing customers to increase revenue.
2. Bundle Solutions and Brand Your Service Packages
Bundle solutions based on your target market’s needs to eliminate service gaps while making it more likely that customers will purchase a higher-ticket package from you to get everything they need without the hassle.
Create packages and white-label them to deliver a consistent customer experience that enhances your brand image. You can also offer a discount for longer-term contracts to generate recurring revenues and lower new customer acquisition costs.
3. Lower Overhead and Operating Costs
If you have been in business for a while, you might have accumulated many tools that may or may not be the best fit for your current needs. Conduct an audit of your software stack to eliminate redundant licensing or subscription costs.
Labor cost is a significant expense for MSPs. Look for ways to streamline your workflows and leverage technologies to automate tasks such as performance and availability monitoring, server provisioning, reporting, and software updates.
4. Let Go of Your Unprofitable Customers
If you have accurate and detailed data to determine the profitability of each customer, you can identify clients that aren’t generating enough profits. You can stop working with them to focus your resources on the most profitable accounts.
You can also run reports to understand recurring issues and take steps to eliminate them. For instance, if a client uses outdated hardware that fails repeatedly, you could ask them to replace the equipment or drop them as a customer.
5. Screen Your Prospective Clients Thoroughly
It could be tempting to take on every prospect who comes through the door, but not all of them are the right fit for your business. Establish a process to evaluate potential clients and use existing customer data to identify those that will be most profitable for you.
Even if you want to take on “tricky” clients, you can enter the relationship with your eyes wide open. You can create a customized service plan and price it accordingly, so you’re charging for the time and resources you expect to invest in the relationship.
6. Review and Consolidate Existing Vendor Partners
Review your existing partner agreements, verify that they still meet your needs cost-effectively, and evaluate new partners if necessary to ensure that you’re getting the most appropriate solutions and support to meet your customers’ needs at a fair price.
You may also consolidate your services and use fewer vendors. You can often get a better deal to save on cost while streamlining processes to reduce the time and resources you need to spend on coordinating services.
7. Outsource Your Network Operations Center (NOC) Staffing
Performing all NOC functions in-house is complex and costly. It’ll take a while before you turn a profit because of the high upfront cost of hiring people and setting up processes. Additionally, retaining talents and navigating recruitment challenges isn’t cheap in today’s tight labor market.
Using a NOC staff augmentation solution from a trusted partner enables you to deliver high-quality services without the high initial capital expenditure. You can also lower your ongoing expenses by eliminating various administrative overheads (e.g., payroll) and the cost of training new employees.
How Can Halexo Help?
Halexo’s complete remote NOC staffing solution enables you to offer continuous IT infrastructure monitoring, issue prevention, and expert remediation to your clients without the time and costs associated with running a large in-house operation.
Our expert resources will work with your preferred tool stack and function as an extension of your in-house team, offering services such as asset management, remote monitoring, application development, remote access control, issue auditing, maintenance scheduling, patch management, and more.
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