Those who figure out the secret to selling managed services not only realize healthy double-digit profit margins over a long period, but something equally desirable to many business owners — the ability to spend some time away from the business without worrying about the next “all hands on deck” IT catastrophe.
So, why exactly are so many IT service providers (60% according to CompTIA’s Third Annual Trends In Managed Services Report) reluctant to sell managed services? I
recently spoke with three industry experts on this topic, including Alex Rogers, founder and president of master MSP and HaaS (Hardware-as-a-Service) provider CharTec.
Rogers shared some great insights on what many experts agree is the most pervasive obstacle break-fix VARs are facing: The belief that there’s more
money in break-fix. Here’s why Rogers believes this lie still persists:
“This misconception is often held because the VAR is thinking in terms of the hourly rate charged for project work rather than the longer term benefits of a recurring revenue stream. It’s also important to remember that project work is not guaranteed; however, a managed service deal includes guaranteed monthly revenue for a long duration.”
If you or a business associate are stuck in a break-fix rut, I’d recommend checking out Retail VARs: How Did It Come To This? written by Business Solutions Chief Editor Mike Monocello, which compares a $10,000 traditional software sale to a $10,000 SaaS (Software-as-a-Service) sale. He then highlights the fact that while the traditional sale has the early on edge over the SaaS option, during the third year after the initial sale, the SaaS sale overtakes the traditional sales model, and the gap between the two models widens from there.
Perhaps the above-mentioned myth isn’t what’s holding you back from making the move to managed services. If it’s either of these two beliefs:
“My Customers Don’t Want Managed Services” or
“It Will Be Too Hard/Expensive To Change My Business Model”
be sure to check out “3 Lies Break-Fix VARs Tell Themselves About Managed Services.”