Mastering the Art of Quoting in Managed Services: A Strategic Guide for VARs

Over the last few years, demand for managed services has grown. Businesses are outsourcing IT management to handle complex and critical technology needs. The reason is simple. This trend allows companies to focus on their main business while letting experts handle their IT.

Transitioning from a VAR to an MSP helps VARs grow their services for clients of all sizes. Be it a small business or a large corporation, it potentially leads to growth and broader market penetration. The model of managed services also contributes to enhanced client retention. By consistently managing a client’s IT infrastructure and systems, VARs position themselves as essential partners.

Thus, it fosters long-term business relationships. Clients often choose managed services because they are more cost-effective than running an in-house IT department. VARs also bring specialized expertise in areas like cybersecurity, cloud services, and network management. This specialization strengthens the VARs’ market position and enhances their brand reputation.

Risk management is another crucial aspect of managed services. Proactive monitoring and maintenance help to mitigate IT-related risks and minimize downtime. Eventually, it adds significant value for clients.

Five Effective Strategies for Quoting Managed Services

As VARs expand their customer base, they face the challenge of crafting quotes that are both competitive and reflective of the value provided. Hence, maintaining a balance between profitability, client perception, and long-term business viability.

This balancing act is important for VARs aiming to sustainably grow their managed IT services offerings. It even helps in maintaining strong client relationships. For VARs switching from VAR to MSP, understanding a managed services pricing strategy is essential.

StrataVAR offers a quoting application for VARs that streamlines the creation of accurate quotes. These include IT-managed security service quotes and ensure consistency across clients.

1. Understand Your Costs Before Quoting Managed Services

For ICT VARs, conducting a detailed cost analysis is an essential step for accurate MSP quotes. This process involves identifying all direct and indirect costs associated with delivering managed services and effectively allocating these costs to specific services. Based on the total service cost, VARs can add a desired profit margin to determine the final price.

The profit margin should reflect the value provided to the client and the market standards and competition. Keep in mind that costs are not static. They can change due to various factors like market conditions, supplier prices, and business scale. Therefore, VARs should regularly review and update their cost analysis. This ensures their quotes for managed services remain accurate and competitive.

2. Align Price with Value When Creating an MSP Quote

Knowing your costs is crucial when quoting for MSPs. However, focusing solely on cost can lead you to overlook the value your services bring to clients. Quoting managed services for ICT VARs differs from quoting hardware or software due to the nature and scope of the services provided. It is because managed services typically involve ongoing support, maintenance, and proactive monitoring. This requires a different pricing model than the one-time or license-based costs associated with hardware and software.

3. Value-Based Pricing in Quoting Managed Services for VARs

This is where value-based pricing becomes a game-changer for VARs. Using a value-based pricing strategy lets you set prices based on both the service cost and the value the client receives. Including this in your MSP quoting system can significantly enhance profitability.

The best part? It can ensure that you are not leaving money on the table. Let us explore how VARs can effectively implement value-based pricing to align their quotes with the true worth of their services. Plus, it can maximize their revenue potential.

A value-based pricing strategy requires a thorough examination of the client’s business and the identification of their pain points. Plus, it includes demonstrating how your services offer tailored solutions. Value-based pricing goes beyond cost-plus models. It illustrates the unique benefits and outcomes your services enable, thus justifying the investment from the client’s perspective.

Take the example of a VAR offering cybersecurity solutions. 

If a client has recently experienced a data breach, the value of enhanced security measures is extremely high. In this case, the VAR’s quote should cover the cost of implementing the security solutions. It should also reflect the value of protecting the client’s data and business reputation. Demonstrating how the service prevents future breaches and potential financial losses can justify a higher price point, aligning the quote with the client’s perceived value.

4. Tailor Your Solutions

Successful quoting for managed services depends on how well you adapt to each client’s needs. While creating a custom solution for every client isn’t practical, VARs should build a flexible quoting system for managed services. This adaptability allows for modifications based on variables such as client size, industry, operational complexity, and specific needs. Thereby, it ensures that the MSP quote is as relevant and effective as possible.

Imagine a VAR that specializes in managed IT services for healthcare providers. The needs can vary significantly from one provider to another, depending on their size, patient volume, and the complexity of their services. A flexible quoting model allows the VAR to adjust the quote based on these factors. Hence, it can provide a tailored managed service solution that meets each client’s specific requirements.

5. Build Long-term Relationships with Your Clients

Quoting is a transactional necessity and a foundational element in cultivating long-term client relationships. Effective managed service quotes initiate a dialogue about the client’s evolving needs and how your services can adapt to meet those needs over time. This approach positions VARs as strategic partners, committed to the client’s growth and success rather than just vendors.

Consider a VAR that starts with offering basic network setup services but, through ongoing dialogue and understanding of the client’s business, gradually introduces more complex and strategic IT solutions. The initial quote opens the door to a long-term partnership, where the VAR continuously aligns its services with the client’s growth trajectory. This relationship-building approach highlights the importance of viewing quotes as stepping stones to long-term business relationships.

Wrapping Up: A Strategic MSP Quoting Tool for ICT VARs with StrataVAR

MSP quoting requires a delicate balance between understanding costs, aligning with client value, offering customization, maintaining transparency, and fostering long-term partnerships. By embracing these principles, VARs can create quotes that secure immediate business. Plus, they can pave the way for sustained mutual success.

StrataVAR’s quoting & ecommerce software for MSP provides a robust quoting application for VAR. This makes it easy to generate accurate quotes for managed IT VAR services while saving time and reducing errors. To learn more about MSP quoting software, contact StrataVAR.