Thanks for posting, I started my 1st IT business 1 month ago, just started getting customers moving and earned my 1st 1000$ in revenue. I have been crunching numbers and am wanting to implement the MSP model, to provide another revenue stream. I believe ive calculated my ideal procing but do you often charge by the user or by the device? What works best in your opinion? I come from a multi billion dollar IT team and am used to high stress IT management, so I dont mind doing whatever is harder if it earns more revenue. I'll be looking to hire my 1st employee soon as well. Thanks for all your knowledge!
Most charge by the user, but many are now charging by device supported. Either is fine, but the key is to ensure your tools are no more than 20% of your COGS (cost of good sold) and labor to support those devices no more than 30% of COGs so you secure a 50% service gross margin. Hardware markup will be more like 20%-23% and software (like Office) will be based on the small margins you get from the software provider.
Hey Robin thanks for the quick reply! Follow up... any advice on how to estimate how much company time a fully managed IT user may take? I'm having trouble setting standard estimates to verify my profitability. Thanks @@RobinRobinsTMT
As a new MSP, would it be ideal to get that great admin and appointment setter right out of the gate? I understand that there's an upfront cost to that, but it seems like growth would also take place more quickly. Great info, and thanks for sharing!
Well, the sooner you can get low-money tasks off your plate the faster you'll grow. If you're doing it all, you'll be slowed down. There's only so many hours in a day and if you're building a scalable business, you'll be constantly hiring people to build the teams you need to do the work, do the marketing, help with the sales, etc.
Great video! In the MSP industry, choosing the right vendor partners is key. For VoIP solutions, Thirdlane Multi Tenant PBX is a solid option.
Thanks for posting, I started my 1st IT business 1 month ago, just started getting customers moving and earned my 1st 1000$ in revenue. I have been crunching numbers and am wanting to implement the MSP model, to provide another revenue stream. I believe ive calculated my ideal procing but do you often charge by the user or by the device? What works best in your opinion? I come from a multi billion dollar IT team and am used to high stress IT management, so I dont mind doing whatever is harder if it earns more revenue. I'll be looking to hire my 1st employee soon as well. Thanks for all your knowledge!
Most charge by the user, but many are now charging by device supported. Either is fine, but the key is to ensure your tools are no more than 20% of your COGS (cost of good sold) and labor to support those devices no more than 30% of COGs so you secure a 50% service gross margin. Hardware markup will be more like 20%-23% and software (like Office) will be based on the small margins you get from the software provider.
Hey Robin thanks for the quick reply! Follow up... any advice on how to estimate how much company time a fully managed IT user may take? I'm having trouble setting standard estimates to verify my profitability. Thanks @@RobinRobinsTMT
As a new MSP, would it be ideal to get that great admin and appointment setter right out of the gate? I understand that there's an upfront cost to that, but it seems like growth would also take place more quickly. Great info, and thanks for sharing!
Absolutely! Hire an SDR (sales development rep) who will call and use e-mail and LinkedIn to develop appointments for you (or your senior sales reps).
Well, the sooner you can get low-money tasks off your plate the faster you'll grow. If you're doing it all, you'll be slowed down. There's only so many hours in a day and if you're building a scalable business, you'll be constantly hiring people to build the teams you need to do the work, do the marketing, help with the sales, etc.
Thumbs up 🙂👍🏾