Drive Down Your COGS
Voccola believes MSP margins should be on par with the other professional services that small and medium businesses rely on , such as legal and financial , which are approximately 30 % to 35 % versus an MSP ’ s 8 % to 12 % profit on average .
The rollout in April of Kaseya 365 — a low-priced subscription bundle with tools and built-in automations for managing , protecting , and backing up endpoints — was Kaseya ’ s first step to drive up margins .
“ We ’ re solving that profit margin problem in two ways : by allowing their engineers to generate more revenue per engineer and lowering the absolute cost of the [ software ] to provide it . And that ’ s having a material change in the industry ,” Voccola says .
“ Anytime that you ’ re able to drive more profitability into an MSP without them having to go and generate additional clients , which is typically the hardest thing for them to do , that ’ s a huge win ,” says Mike Sanders , Kaseya ’ s Chief Revenue Officer . “ And we ’ re able to do that in a pretty convincing way with Kaseya 365 .”
A “ Happy Meal ” For MSPs — With A Profitability Prize Inside
The concept of a bundle is not new , says McBain . “ Other industries and other parts of tech have really done well with bundles .” In the MSP industry , he says , “ you ’ ve seen this over the last 20 years as the PSA companies acquired RMMs and then they brought it together with data backup and then with cybersecurity . So these companies have been building these bundles but charging separately for them .”
In terms of Kaseya 365 , he says , “ It makes sense that there ’ s going to be a ‘ Happy Meal ’ for one price .”
There are some things to weigh when you go all-in with one vendor , he says . “ Does that simplify it for the partner ? Maybe . Are they getting best of breed ? Are you getting the best hamburger , the best fries , and the best drink [ with a Happy Meal ]? Probably not , but are you able to overlook that the fries aren ’ t the best , but I ’ m getting a good deal and I ’ m getting it all in one place ? Yes .”
He concludes , “ It was an impactful announcement for one-third of this entire managed services market who struggle with profitability .”
Colleen Frye is Executive Editor of MSP Success . A veteran of the B2B publishing industry , she has been covering the channel for the last 17 years , most recently as managing editor of ChannelPro . Her work has been published in a variety of media , including TechTarget sites , InfoSecurity Professional magazine , and Application Development Trends .
Is The Pricing Pressure On ?
In just three months after announcing Kaseya 365 , MSPs already had more than 5 million endpoints under management with it , according to Kaseya .
Are other vendors responding to the price gauntlet Voccola threw down ?
In May , ThreatLocker announced ThreatLocker Unified , a bundle of all their existing products and add-ons , for 30 % less than purchasing the products individually . ThreatLocker CEO Danny Jenkins told MSP Success at the time that ThreatLocker Unified wasn ’ t a response to Kaseya 365 but acknowledged that several companies are doing the same thing when it comes to bundle options .
ConnectWise also has a “ fairly new ” bundle , says CMO Angus Robertson . “ Actually , each of our products has a good , better , best package . But then we also do have a bundle that ’ s very competitive with what Kaseya offers . That includes our RMM plus RPA , MDR , and CAM [ ConnectWise Asset Management ].”
Offering that bundle “ is partly in reaction to the market trends relative to pricing , but then also it ’ s representative of our maturity as we bring these different products together . So six months ago , we didn ’ t have the level of capability we have now with RMM and RPA and MDR and CAM and how they work together . So we ’ re now at a point where we can provide value , not just by bundling them but that they actually work with one another .”
But as for driving prices down in general , a quick poll of MSP Success Advisory Council members does not show a trend by vendors to lower sticker prices .
“ Surprisingly , I haven ’ t seen much movement with our vendors ,” says council member Tito Huynh , vice president of Business Data Services , an MSP in Overland Park , Kansas . “ In general , I ’ m seeing a price increase .”
ConnectWise ’ s Robertson says they increased prices this year in line with inflation .
Another council member , Matt Rose , CXO of Winter Spring , Florida-based Tech Rage IT , says “ None of my active vendors have dropped prices or done much in bundling . I ’ ve actually seen more vendors doing small increases this year — a 5 % increase or adding a credit card charge .”
Others in the council reported no pricing changes .
How pricing plays out going forward — and if MSPs will be the beneficiaries — remains to be seen .
MSPSUCCESS . COM | 17