Are you planning to raise your managed service prices? If so, you are in good company. That’s according to a new global survey of channel partners in the last week conducted by analyst firm Canalys.
The survey showed that 86% of partners plan to raise their managed services prices in the next 6 months. Only 16% said that they would raise prices for new clients only and not raise them for existing clients.
Additionally, only 15% of those responding to the survey said they do not sell managed services. That’s the lowest that Canalys has ever seen.
Why Partners Are Raising Prices Now
What’s behind the plan to raise prices? We asked the experts at Canalys.
“These numbers are materially higher than a similar survey earlier in the year, so I think macro-economic issues in addition to specific business cost increases -- vendor prices, gasoline prices, salary inflation, etc. -- is bearing down on 86% of providers,” Canalys Chief Analyst Jay McBain told ChannelE2E.
The channel partner type may also be informing the results of this survey. In this poll of 333 partners, the majority were resellers and systems integrators (Sis) with less than 50% of their revenue from managed services. There was a smaller proportion of pure MSPs represented in the survey, according to Canalys Senior Analyst Robin Ody.
Managed Service Price Increases: The Big Picture
Ody weighed in with some additional thoughts on what’s behind the plans to raise prices.
“Pure MSPs have spent a lot of time not raising prices to where they need to be,” he told ChannelE2E. “We know from industry benchmarking that these partners tend to undervalue their services."
What the Best Performing Partners Do With Pricing
"The best performing partners are more selective about the customers they take on and the prices they charge, so there may be some correction going on based on partners catching up and being stricter on their desire to hit the right levels of gross margin,” Ody said.
Ody offered some additional perspective on the SIs and resellers participating in the survey.
“For the resellers and Sis that are doing a minority of their business from managed services, they are always going through changes to keep up with the conditions in the market, but also as they add skills organically or through acquisition and transition their sales teams to managed services incentive models, they have an opportunity to improve their service offering and use that as an opportunity to boost pricing to new and existing customers that are coming up for renewal,” he said.
McBain said the managed services market is approaching half a trillion dollars next year and price increases will further accelerate the double-digit revenue growth of this industry.
