Poor pricing practices damage MSP profitability

Ottawa-based N-able Technologies along with NetEnrich co-sponsored a research report from the 2112 Group called Countering Artificial Commoditization and Poor Pricing Practices in Managed Services. In that report, the 2112 Group found that artificial commoditization is a self-inflicted wound on the IT sales channel that won’t heal unless we put a stop to poor pricing practices and the lack of price integrity.

The report’s author Larry Walsh, president and CEO of The 2112 Group, based in New York, said the artificial commoditization of services is robbing the channel of its ability to invest in the future and the only fix is to help MSPs learn the science of value-based pricing and preserve the profits and revenue stream IT services deliver.

JP Jauvin, president and COO of N-able said that in order to sustain profits and clearly differentiate their services, MSPs must master the art of value-based pricing and value-driven communications.

Justin Crotty, senior vice president and general manager of NetEnrich, has heard a lot about the challenges with pricing and commoditization from channel partners. He believes this report will outline the pricing pitfalls, plus offer a logical approach to selling and delivering managed services, which is very different from selling and providing traditional IT solutions. “A challenge the IT industry as whole seems to struggle with,” Crotty said.

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