Best Practices Blog

Blog archive

MSP Ups and Downs, Part II: Pricing

Joe Nardone, of Expert Data Labs in the Pittsburgh, PA area, runs an IT service consultancy and MSP shop that seems rock solid. Nardone believes that some day soon IT services will be just like a monthly or periodic utility bill for small and medium-sized businesses bundled to fit business needs. Like cable, electric or water, Nardone says, IT services would literally and figuratively 'fit the bill.'

The economies of scale under such a setup and the prospect of IT as a utility and as an increasingly outsourced function of both SMBs and some enterprise organizations are among the main reasons for the growth of managed services.

This is why it seems peculiar that despite growth in a down economy and inflation in the prices of healthcare, gas, food and other essentials, that many MSPs are decreasing their pricing at a time of rapid growth and increased demand for managed services.

According to Jeffrey Nelson, CEO of Anexio, a Sarasota, Fla.-based MSP, MSPs are slashing prices like used car salesmen in checkered blazers to retain old customers and gain new ones.

This, Nelson suggests, is because while a growth in service offerings and demand has created that utility service feel, specialized services are naturally falling off a bit resulting in what he says is an industry that has "commoditized itself" and would therefore see pricing pressure.

Nelson and others in the know in the MSP space have seen little change in pricing of services aimed at SMBs due to inflation.

Conversely, the cable bill culture and the coming cloud service provider incursion on the MSP market are what are affecting pricing and strangely enough are ultimately what can bring pricing back in line with MSP growth.

Apropos, a growing number of MSPs are blending unified telecommunications and PC service product sales and have access to cloud offerings. Once this is combined with proactive managed services and support and more MSPs enter the fray, prices will likely stabilize.

You don't need to be an egghead economist with a knowledge of graphs and charts to know that low prices and growth don't work in tandem in the long run, unless you're Wal-Mart. At last count, most MSPs and SMBs aren't wearing blue vests and greeting you when you come to the door.

It's vital, then, that price stabilization and consolidation of MSP companies and the services they offer are what's ultimately needed to catch up with growth.

Posted by Jabulani Leffall on March 11, 2011 at 11:57 AM

Reader Comments

Add Your Comments Now:

Your Name:(optional)
Your Email:(optional)
Your Location:(optional)
Please type the letters/numbers you see above

Connect your clients to the cloud and revolutionize the way business gets done. Join Zenith at the next Cloud Revolution event near you to learn how you can deliver right-sized cloud solutions along with peace of mind using an enterprise level cloud solution tailored for the SMB market. At the Cloud Revolution event you will see SmartStyle Computing - a new way of looking at IT infrastructure. Using cloud technology, SmartStyle Computing provides high availability, built-in business continuity and a revolutionary storage system. Zenith's SmartStyle Computing solutions will set you apart from the competition, allow you to close more sales, reduce overhead costs, and increase profits all while ensuring maximum customer satisfaction.

The future is efficient, affordable and easy to implement. Join the Cloud Revolution and connect to the future. Each session runs about three hours. Registration begins at 8:00 AM for the morning sessions and at 12:30 PM for the PM sessions. There will be plenty of one-on-one time for questions, as well as, networking with your peers.

To register, please visit

ZenithZenith BDR Solution: Overview
Watch a brief overview of Zenith's Backup and Disaster Recovery Solution. Learn more about the Zenith BDR and how it can grow your business.
Duration: 2 minutes, 22 seconds

ZenithZenith BDR Solution: NAS versus Tape
Take an in-depth look at the advantages of using disk-based backup over tape. Learn how the disk-based architecture used in the Zenith BDR is more effective and economical than traditional tape backup solutions.
Duration: 4 minutes, 15 seconds

ZenithZenith BDR Solution: Features
Zenith's Backup & Disaster Recovery Solution has many features to keep your business up and running. Take a tour to learn more and explore our robust backup and recovery platform.
Duration: 2 minutes, 58 seconds

ZenithZenith Services Commercial
Description: A brief overview of how Zenith Infotech can help grow your managed services offering.
Duration: 1 minutes, 38 seconds

more resources from Zenith