"Managed service providers have begun to see their businesses change, as prices for delivery of managed services have declined, sometimes drastically and to a level that threatens their business." [channelinsider] It's HOW the business is run. Building it yourself requires technical talent that is getting more expensive and hard to find. Yesterday at a Tampa Titans in Tech event, every CIO mentioned that they had many positions available, but can't find the talent to fill the positions.
Even using open-source software to save on licensing fees is a challenge, because of a lack of available talent for those platforms.
There is also the commoditization of monitoring desktops, where every person familiar with a remote monitoring tool is getting in the game. This is causing pricing pressure.
You are probably tired of hearing me say this, but the key is the Bundle. No line items. No price break-downs for the customer. (This encourages shopping and haggling.) Design 3 bundles that customers can pick from. Maybe: Light, Rugged and Heavy Duty. Gold, Silver, Bronze and Platinum are over-used (see here). And too many options confuses the customer.
"Whether you’re referring to managed services or cloud services, try to focus on a Cake-oriented pricing model, promoted by such consulting firms as TruMethods. Some of the best MSPs in the TruMethods group are charging anywhere from $100 to $150 per month per user for all-in support and IT services — including PC management, security, cloud storage, hosted email and more." [MSPmentor] In other words, sell them the chocolate, vanilla, strawberry cakes, not the ingredients!
Need a calculator?