How to make a Load of Cash from a Free Service – ExchangeDefender Blog

September 25, 2013

How to make a Load of Cash from a Free Service

Filed under: Business Tips,Consulting — vlad @ 12:12 pm

One of the best things about working at ExchangeDefender is helping partners realize that they can make great, predictable, recurring income from cloud services. It’s no secret that MSP’s and IT solution providers have been slow to adopt “The Cloud,” but things are changing.

By now you should have heard about the Migration Service that ExchangeDefender has been blogging and talking about through social media, our website, as well as webinars. This new service provides a value added solution to our partners, that no other cloud provider is offering as an included part of their Hosted Exchange platform.

What this means for you, is that the service you have been charged for by others, is now a definitive way to earn additional revenues. Let’s deep dive into exactly how you can price this solution to your customers.

Pricing

There are many ways to price an add-on service such as the ExchangeDefender migration solution. The most common pricing models are, “including the pricing in the recurring monthly fee,” “charging an upfront flat project fee,” or “charging customers hourly.”

Hourly Fee Option:

With the migration solution, adding on an hourly fee for the migration may not be the best option. Since there will be very little, if any onsite tech time, an hourly fee may be harder to justify and may create unwanted questioning by the customer after the job is complete. For this reason, we would advise against this pricing model.

Upfront Project Fee Option:

An upfront project fee has been a very common way of infusing cash into an IT business. Since the migration is included with the hosted exchange platform, there is no cost for the MSP. This means that any upfront fees for the migration are 100% revenues for the business. Many MSP’s and IT providers that currently provide Exchange migrations are just continuing with their normal fee structure. If you currently do not have a fee structure, we outline some ideas and options in the next section.

Recurring Monthly Fee Option:

Many MSP’s are beginning to offer easy payment options built into their managed or cloud services. This option allows customer to signup for services and get the work done, without having to come out of pocket for an initial project cost. The advantage for many is an easier sale to customers, and the advantage of a continuous recurring revenue stream, which continues to grow over time. In this scenario there is no real end game for the customer. Most will continue to pay the monthly fee until they no longer need the service, “and who doesn’t need email?”

Pricing is straightforward. Determine what you would normally charge for this service as a project. We generally see prices from our partners, which range from $200 to $2000+, depending on the size of the user base. ($100 per user is a good start if you are unsure of what to charge.)

Once you have determined this price, it is a matter of dividing that price over the amount of months you have signed an agreement with your customer for. For instance, if you were to charge a $1000 project fee, and the agreement length is 36 months, divide $1000 by 36 to get an add-on of $27.00mo. You can break this down even further by then dividing that number by the total users. If you have 10 users just divide $27 by 10, this means you will add an additional $2.70 to each hosted exchange mailbox for the life of the contract and beyond.

What all of this means for your business is you will make “loads of cash,” and unlike comparative solutions like Office 365 or other competitors, you are not required to handle the migration yourself, or outsource to expensive solution companies that provide services to these vendors. This gives you a major advantage over your competitors, and allows you to build and grow your business even further.