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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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In the competitive landscape of managed services, pricing your IT infrastructure offerings correctly can mean the difference between thriving and merely surviving. For many Managed Service Providers (MSPs), determining the right pricing strategy feels more like art than science. How do you balance covering your costs while remaining competitive and profitable? This guide walks through the essentials of pricing managed IT infrastructure services to maximize both value delivery and sustainable revenue.
Understanding the Managed Infrastructure Market Landscape
Before setting prices, you need to understand where your services fit in the broader ecosystem. The managed IT infrastructure market reached $185.98 billion in 2022 and is projected to grow at a CAGR of 9.8% through 2030, according to Grand View Research. This growth reflects the increasing complexity of IT environments and the ongoing shift toward outsourced expertise.
Enterprise clients increasingly view managed infrastructure as a strategic necessity rather than a cost center. According to Deloitte's 2023 Technology Industry Outlook, 76% of C-suite executives consider reliable IT infrastructure critical to their digital transformation initiatives.
Common Pricing Models for IT Infrastructure Services
Several pricing frameworks dominate the managed infrastructure space, each with distinct advantages:
1. Per-Device Pricing
This traditional model assigns a flat monthly fee per managed device (servers, workstations, network equipment).
Advantages:
- Straightforward for clients to understand
- Predictable revenue for service providers
- Easy to scale as client environments grow
Disadvantages:
- Doesn't account for varying complexity between devices
- May not align with your actual service costs
- Can discourage clients from adding necessary equipment
2. Per-User Pricing
Instead of counting devices, this model charges based on the number of users supported.
Advantages:
- Accommodates the multi-device reality of today's workplace
- Scales naturally with client growth
- Simplifies billing in BYOD environments
Disadvantages:
- May undercharge clients with high device-to-user ratios
- Doesn't account for users with specialized infrastructure needs
- Can be challenging to define "users" in complex organizations
3. Tiered Subscription Models
This approach offers different service packages (e.g., Bronze, Silver, Gold) with escalating service levels and corresponding pricing.
Advantages:
- Provides clear upgrade paths for clients
- Allows for customization within defined boundaries
- Creates opportunities for upselling
Disadvantages:
- May lead to scope creep if tier boundaries aren't clearly defined
- Can create service delivery challenges at tier transitions
- Requires careful design of tier offerings to ensure profitability
4. Value-Based Pricing
Rather than focusing on costs, this model prices according to the business value delivered.
Advantages:
- Potentially higher margins
- Aligns your incentives with client success
- Differentiates from commodity service providers
Disadvantages:
- Requires sophisticated understanding of client business models
- More complex to sell and explain
- Demands strong ROI documentation
Determining Your Base Costs
Regardless of which pricing model you select, understanding your true service delivery costs is essential. For managed infrastructure subscription services, include:
- Direct Infrastructure Costs
- Hardware/equipment costs (if provided)
- Cloud platform expenses
- Software licenses
- Data center/colocation fees
- Labor Costs
- Technical support time
- Maintenance and monitoring
- Implementation and onboarding
- Account management
- Overhead Allocation
- Office space and utilities
- Administrative support
- Marketing and sales expenses
- Professional development and certifications
According to Service Leadership Inc., high-performing MSPs maintain a 30-40% gross margin on managed services after direct costs.
Setting Recurring Infrastructure Service Fees
Once you understand your costs, determining recurring fees involves strategic considerations:
Analyze Competitive Pricing
Research indicates the average monthly managed infrastructure spending per user ranges from $100-$300, depending on service scope and geographic region. While you shouldn't simply match competitors, understanding market rates helps position your offerings appropriately.
Consider Service Level Agreements (SLAs)
Your response times, uptime guarantees, and support hours directly impact your costs and perceived value:
- 24/7 support typically commands a 30-50% premium over standard business hours
- 99.99% uptime guarantees require significantly more redundancy than 99.9% commitments
- 15-minute response guarantees demand more staff than 4-hour windows
Factor in Technology Stack Complexity
Not all infrastructure environments are created equal:
- Legacy systems often require specialized knowledge and more hands-on maintenance
- Hybrid environments spanning on-premises and cloud increase complexity
- Regulated industries (healthcare, finance) demand additional compliance measures
Value-Added Services Impact
Consider how these services affect your core infrastructure pricing:
- Security monitoring and management
- Data backup and disaster recovery
- Cloud transformation services
- Virtual CIO services
Data Center Service Pricing Considerations
For MSPs offering data center services, several unique pricing factors apply:
Space and Power Metrics
- Rack units (U space)
- Power consumption (kW)
- Cooling requirements
Connectivity Requirements
- Bandwidth (available and guaranteed)
- Latency commitments
- Redundant paths
Facility Characteristics
- Tier certification level
- Geographic location
- Physical security features
According to Turner & Townsend's Data Centre Cost Index, the average cost to operate a 1MW data center facility ranges from $5.3M to $8.5M annually, depending on location and specifications.
Practical Pricing Strategies for Sustainable Growth
Based on industry benchmarks and best practices, consider these approaches:
1. Segment Your Client Base
Different industries and company sizes have varying price sensitivities and requirements. Consider creating industry-specific packages that address common pain points:
- Healthcare: HIPAA compliance, electronic medical record system support
- Financial services: Security and regulatory compliance, transaction processing reliability
- Manufacturing: OT/IT integration, supply chain systems uptime
2. Bundle Strategically
Packaging related services can increase perceived value while improving operational efficiency:
- Basic infrastructure monitoring + security essentials
- Server management + backup and disaster recovery
- Network management + SD-WAN services
3. Create Transparent Pricing Structures
Clients increasingly expect clarity in service pricing. Consider publishing base rates for standard components while maintaining flexibility for customization.
4. Implement Value-Based Adjustments
After establishing cost-based minimums, adjust pricing based on:
- Client size and growth potential
- Strategic importance to your business
- Complexity of the environment
- Geographic location and service difficulty
Common Pricing Pitfalls to Avoid
Underestimating Implementation Costs
Onboarding new clients typically requires 30-50 hours of work that's often inadequately priced. Consider separate implementation fees or factor these costs into your recurring rates.
Failing to Account for Automation Investments
Your automation tools and processes create efficiency but require significant upfront investment. Ensure your pricing reflects both the value and cost of these capabilities.
Ignoring the True Cost of 24/7 Support
Round-the-clock support requires at least 5 FTEs to cover a single position continuously. If offering extended support hours, price accordingly.
Pricing Without Service Boundaries
Service creep is the silent margin killer. Clearly define what's included and what triggers additional charges.
Evolving Your Pricing Model
The most successful MSPs continuously refine their pricing strategies:
- Regular Services Review
- Analyze service utilization patterns
- Identify frequently requested items not in standard packages
- Assess profitability by service type and client
- Annual Price Adjustments
- Build in annual increases of 3-5%
- Communicate changes well in advance
- Tie increases to enhanced service value
- Client Profitability Analysis
- Calculate true profit per client
- Identify characteristics of your most profitable relationships
- Adjust acquisition strategy to target similar prospects
Conclusion
Effective pricing of managed IT infrastructure services requires balancing multiple factors: your costs, market positions, client needs, and value delivery. The optimal approach typically combines elements from several models, customized to your specific service offerings and client base.
Remember that pricing is not just about covering costs—it communicates your market position and value proposition. Premium pricing can actually attract quality clients who understand that reliable infrastructure is an investment, not an expense.
By developing a structured, strategic approach to your managed infrastructure pricing, you create a foundation for sustainable growth and profitability in this competitive and expanding market.