Should You Sell Networking as a Managed Service?

A recent study commissioned by the World Bank Group estimates there are between 365 million and 445 million small to midsize businesses (SMBs) in emerging markets around the world. These businesses increasingly seek managed service providers (MSPs) for outsourced IT services. According to the same study, in the next three years, SMBs expect up to 75% of their IT infrastructure to live in the cloud. This reliance on the cloud puts increased pressure on the network infrastructure needed to run the business.

For years, networking technologies have been a constant for IT service providers, resellers, value-added resellers (VARs) and MSPs. However, networking has typically been deployed and repaired on a project-basis. The idea of proactively managing networks as a service has not been commonplace until recently. In this article, we outline key components of successfully delivering networking as a service.

Sell Based on Value: To be successful in selling networking as a service, it is essential to pitch the value of networking rather than the device itself. Imagine yourself as the client. Why is having a reliable network important to you? How would it impact your day to day if your networking service did not work? If you can answer those questions in detail, you can begin to help your clients understand how much they rely on connectivity to run their businesses successfully and the value you bring. Your team can keep them online and deliver and manage a network infrastructure that keeps them running. So, sell that expertise, and don’t be afraid to charge for it.

Choose a Go-To Marketing Strategy: The strategy you choose to sell networking as a service will be based on several factors, including how you deliver other managed services, your market, and financial concerns such as cash flow, margin targets, etc. The classic managed services strategy is to sell networking hardware along with an ongoing monthly service fee for that hardware.

Hardware as a Service, or HaaS, is another option worth considering. In this model, the customer pays a single monthly fee for service and hardware. It’s a one price, all-inclusive networking service. The HaaS model with the automatic hardware refresh saves you the effort and hassle of going through another sales process with your client. This removes the challenge of a new negotiation and, potentially, the introduction of a competitive MSP into the conversation.

Whether you opt to sell hardware or offer HaaS, networking technology that enables you to deliver effective services should be a top priority.

Hone in on Your Pricing: MSPs use a variety of pricing strategies today, and yours will ultimately be dictated by your business’ specific needs and market demands in your region. Per-user or per-device pricing is the most common, while others opt for a fixed-price model or a hybrid of the two. When setting your price, start with your costs. From there, you can add your margin. When determining markup, it is important to look at costs associated with particular clients. So, think of per-user/device as a starting point, and adjust the pricing accordingly. Remember, you are selling your expertise and value. That’s why your clients hire you. Charge accordingly.

We live in an increasingly connected world. Businesses of all shapes and sizes are dependent on the network and are looking to managed service providers to deliver fast, reliable connectivity. To learn more about this opportunity and gain insights from your peers in the MSP channel, download Datto’s eBook “Selling Networking as a Managed Service.”

John Tippett is VP of Product, Networking, Datto.

This guest blog is part of a Channel Futures sponsorship.