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5 Ways to Improve Your MSP Service Level Agreement (SLA)

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5 Ways to Improve Your MSP Service Level Agreements (SLAs)

SLAs are the foundation of your MSP business. They are essential to building strong client relationships and must be clear, reasonable and well-constructed.

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4 Ways to Increase Your MSP's Profit Margins

Posted November 4, 2013by Lauren Peyton

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More and more small- and mid-sized businesses are outsourcing their IT management work to managed service providers (MSPs). Although this jump in the market size means more business for MSPs, most of these professionals face tough competition in pricing. To retain their loyal customers and attract new leads, managed service providers are forced to drop their prices. 

Here are some tips that can help you increase your bottom line.

1. Opt for Infrastructure as a Service (IaaS)

IaaS represents one of the fastest growing markets in cloud service, and offers important cost benefits to boot. Managed services providers are often able to boost revenue and profit margins by simply moving their services to the cloud. One of the easiest ways to do this is to utilize infrastructure from different IaaS vendors. Cloud hosting services can also help you with specific issues, such as dynamic scaling, on-demand infrastructure capacity, metering and cost.

2. Embrace Automation

Automation can help you work more efficiently than ever, while allowing you to offer your customers lower prices without sacrificing quality. Completing repetitive tasks in a standardized way enables you to scale more intelligently and profitably, which means that you can carry out a higher number of assignments, serve more customers, add new services and improve service levels. Numerous integrated software products can support end-to-end business processes of MSPs because they include differentiated operational capabilities, giving you competitive positioning in the market.

3. Create Value-Added Service Packages 

Another thing you can do to bump up your profit margins is expand your portfolio. Today, most customers are looking for a managed services provider that offers a variety of services, ranging from desktop to anti-virus and patch management. Unfortunately, some MSPs limit their portfolios to one or two elements. A high number of business owners consider outsourcing a number of elements, from remote monitoring to various cloud tasks, such as hosted emails and cloud storage. By diversifying, you can grow both your client base and your bottom line.

4.  Consolidate Your Management 

Although profitability is one of the key goals of any organization, reliability is what really makes a business successful. To develop a business your clients can trust, your departments should work together as a team, forming a single entity that provides customers exactly what it promises. This philosophy should extend to your vendor selection; choosing the right vendors determines your success as IT managed service provider.

All these key points can help MSPs improve their profit margins and become successful in this industry sector. However, the managed services providers who don’t invest enough time and money in their businesses will never win in this highly competitive market segment. It’s true that you have to spend a little to make a little more, but you’ll find that every investment is worth it when you see your profit margins increase and gain an edge over the competition.


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