Technology changes rapidly, and sometimes, it’s hard to keep up with what’s new, what’s on its way out, and what the next big thing is that you should be looking for. The way you contract with your technology’s Managed Services Provider is changing, too, to ensure that you get the most out of your IT budget with value-based pricing and outcome-driven contracts. Let’s explore what that means for you and your SMB.
Understanding Value-Based Pricing
Value-based pricing differs from the more traditional cost-plus pricing models because it focuses on your business and delivers tailored services that add real value to your enterprise. This more transparent pricing structure focuses on your desired outcomes and how an MSP can offer your business more value than just IT services. This might include considering these factors:
- How much time does your in-house staff save?
- Has employee satisfaction increased?
- Have your company goals and objectives progressed since partnering with an MSP?
Having an MSP that adds this sort of value to your business is, well, invaluable. With value-based pricing, your workforce will save time and resources, and you’ll have increased productivity and profitability to go along with your well-managed and strategically-planned IT services.
Understanding Outcome-Driven Contracts
An outcome-driven contract is explicitly designed to meet your business’s needs and goals. When you partner with an MSP that offers outcome-driven contracts, you know you’ll be able to work with them to define clear expectations and measurable objectives that you can plan and execute together. This leads to more accountability for the MSP and better customer satisfaction (that’s you!).
When building an outcome-driven contract with your MSP, be sure to think about metrics or key performance indicators (KPIs) that will best serve your business’s needs. Consider factors like:
- Average response time
- Average resolution time
- Number of calls per month (or quarter, etc.)
- Number of devices and/or users
Setting KPIs and deciding who will track them and what tools will be used for tracking help you and your MSP set manageable, agreed-upon expectations for the services they’ll be providing your business.
Implementing Value-Based and Outcome-Driven Models
Transitioning to a value-based pricing or outcome-driven contract model requires a thoughtful approach that prioritizes collaboration. First, you have to outline your expectations and outcomes and make sure that the MSP can contribute to achieving your goals. This step is critical to setting the stage for your partnership with the MSP. Clear communication, active participation, and shared responsibilities will create a foundation for long-term success.
Everyone needs to be on board with the pricing structure, the expected outcomes, and any adjustments that may be required. This transparency builds trust while establishing KPIs provides a measurable framework for creating and evaluating the benchmarks that will guide the ongoing process. You also have to be willing and able to perform continuous assessment and feedback—adjustments are part and parcel of the transition to a new pricing model. These adjustments ensure that the delivered value remains aligned with your business’s IT needs.
Training and alignment are also critical elements of this transition period. Proper training reduces the risk of misunderstandings and ensures that everyone involved understands how success is measured and their role in the outcomes. Periodic review meetings can give you time and space to discuss progress, address concerns, and plan for adjustments. Ongoing communication keeps your partnership with your MSP on track and allows you opportunities to manage any challenges promptly.
Quick Guide: 7 Steps to Making a Smooth Transition To a New Pricing Model
- Define your objectives
- Establish the details of your KPIs
- Be a collaborative partner with your MSP
- Be transparent and expect transparency in return
- Provide training where necessary before, during, and after the transition
- Schedule regular review and troubleshooting meetings
- Perform assessments and implement adjustments
Closing Thoughts on Value-Based and Outcome-Driven Pricing Models
Maybe you’ve never given too much thought to the pricing model of your MSP contract, but as times change, so should your pricing model. Value-based and outcome-given models are advantageous to your business because they are more transparent and more customizable than conventional cost-plus pricing plans. These pricing models are also beneficial because they work for all shapes, sizes, and sectors of SMBs.
If you’d like to learn more about how value-based and outcome-driven MSP pricing can save your resources and boost your productivity, get in touch today. Experienced IT professionals are available to answer all your questions.