 Hey there, it's Brett Chittum with Lawrence Systems and I'm here with Tom Lawrence and we're kind of doing a coffee talk here And we're really actually Want to talk about how much per seat do you charge and and Tom and I have had a lot of discussion in this We've also seen this in forums on on Facebook forums on Tom's forum It's it's everywhere because people are always trying to figure out. Well, how much do I charge? What do I what what what am I gonna make? How much am I gonna make and and I think that's a great topic To really delve into today. So Tom, what do you think? I think the first question because this comes up How much do you charge is not the right question because you're starting out with this whole what not Knowing what you're offering and making a lot of assumptions. So I've seen people claim Oh, I'm getting X dollars per head or per seat per person However, you do your pricing models, but you'll see people with wildly different offerings You're like, hold on this person's charging 50 bucks a month per person This person's charging 500 bucks per month per person But it comes down to what are they bundling in and offering for those services? And one of the things that I've seen a lot of MSPs do and this is fine And there's a lot of there's reasons to do this But there's reasons sometimes we don't do this comes down to what you want to do is they try to offer Everything they possibly can they take over the phone bill the internet bill as many things as they can they put under their roof So not just like fixing the computers or managing computers or you know managing security on computers But to go a step further to do everything from certain levels of auditing certain levels of compliance monitoring even like I said right down to I've seen someone that said they offered some of the accounting services bundled in with their MSP So of course you're gonna get more proceed because you're taking the burden off and that's what business owners are looking at even you as an MSP business owner IT business owner you probably don't do everything in-house you outsource certain functions So businesses decide what's worth it to have in-house and what's worth it to outsource and that's the balance you try to create So you can't start with how much are you charging until you talk about what you actually want to offer and one thing I can give as a piece of advice Don't try to offer everything if you're not good at it because if you're not good if you're really good technically But then offer a couple other outlying services that you're really bad at offering that's gonna taint your whole Perspectives they're gonna go. Yeah, my computer's work, but boy every time I deal with them all these other issues. They're really difficult So you have to really think about before you just throw everything in as you're offering of focus on things You can offer. Well, that's the first most important part before you think about the price Well, because when you think about what you offer your your clients are gonna want to know what you offer And when I have these conversations with clients, I never start out with a price I always talk about what is offered. These are the certain things You're gonna get with us when we take over your managed services and when we are working with you So I always the customer wants to know what you offer. That's that's the bottom line You start with that and then the the price just comes out and some of the clients We some that are very tech savvy that we work with we really enjoy them as clients and one of the reasons They left their previous MSP was the MSP wasn't all or nothing you either do everything We hold your internet we hold your phones We do it or you don't use us and they said we won't use you that was their solution and they've been great clients We have no reason You know, I always take it with a great assault when someone's complaining about their previous MSP But when someone tries to offer all services and the client doesn't want it You're not a good fit if that's the offer you have you have to find people that want to accept that Yeah, we have niched ourselves into being you know, the heart We don't really do hardware as a service and a lot of people preach you have to do hardware as a service You're leaving money on the table if you don't do it But some people aren't really into that you have to figure out what your market niche is and it's not that I'm thinking those people are wrong offering it. We are just pursuing different avenues and different clients By the way, this is Tom in October of 2021 There could be a future Tom that's talking about her as a service So don't get mad at this time because hey things change life change, but this is Good point to me. Yeah, well, and then we also talked about you know when you when you're looking at what you charge What's your employee cost? Yeah, how much is that gonna be and what are your thoughts on that Tom? Well first to start with the tooling cost the there's an assumption that if you're paying Let's say a couple dollars per endpoint that means you'll just triple it or quadruple that cost per endpoint The reality is that few dollars a month you pay when you're starting out it starts to add up And you're like hey, I'm managing four hundred five hundred systems times five dollars a month ten dollars a month That seems like a lot until you have staff and you can't just go on the tooling cost And the most important thing and I've run into so many people who are stuck and then we've talked to them We've still a little coaching and Brett does some of the business coaching It's actually how I met Brett but a little background on that But if you don't price your services as if you have employees even though you don't you won't ever have employees Right, this is where people really get stuck. They just look at the cost and go I'm making great money matter of fact. That's a good thing to think about You will probably make a lot of money when you're doing yourself There's a time at which you can keep doing it yourself for quite a while without any employees make a whole lot of money But if you aren't pricing it so you can eventually fill someone in a job I don't get me wrong. You'll enjoy that time when you're going man. I'm just me. I'm enjoying this I'm loving it about a year into it. You're like I would love a day off I would love not to be the one person that the entire world falls on all the time I need to hire someone and if you didn't price it because that's what people will be stuck on going Everyone loves me. I gained all these clients and I'm like, yeah, how do you take it out? Well, I don't because I never priced it so I could ever fill anyone in a position So you have to be thinking this like the day one you're putting your costing together Right. You got to you got to price accordingly on everything Um because when you go to raise your prices That's going to cause some distention within your clientele. So price it right up front And there's less you're going to have to raise prices once in a while, right? But less often when you do it right up front, right? And you got to remember the cost of living goes up There are increases the as that small increase happens as long as you're At the minimum your price costing model should at least raise at the cost of inflation If not, you're losing money if you made a million dollars this year and you did a million dollars next year Unless there was zero percent inflation, which I don't think that's ever happened, Brett But you definitely didn't make as much money the next year So at the minimum you're doing that at the other side of it you should be increasing it And this is something your clients you can understand because they have everyone Has increased prices around them cost of this went up cost of that went up cost of insurance went up The cost of managing computers went up, but you can't go in there and say i'm going to Do a 30 40 price hike because I decided now I need to hire employees That's a little bit harder of a conversation to have and it also from their own perspective You're like, oh, you didn't plan to have employees. Yeah, this is you know Your client talking back to you when you slap them with a big price increase They're like, oh, I guess you never thought about actually having people I thought you would offer these services for a really low cost forever You know you make an awkward conversation versus hey, you need to do about a five or ten percent price increase because You know what my insurance costs more or this costs more or these factors have changed in the world And that's a more understandable conversation. So just something to think about and keeping the perspective on there of how you manage your business Absolutely, net. That's a perfect segue into other costs What are some of the other costs that are involved when you have are you are you renting space? Your equipment um your equipment costs money and the right equipment costs money So you've got to take those into consideration as well because at some point everything has a useful life You're going to have to replace that equipment at some point as well So all of these factors have to take you know, you need to take into consideration Yeah, and this is when we see equipment that there's the tangible like the physical things you may use And then there's a little bit less tangible But there may be different training things you need to do and things you need to invest in yourself You still have to factor that in you still have to think about are you am I going to take another course? So I have to get a certification. Do I have to keep up with some type of Any type of you know, I how would I describe it? All the different things in the industry sometimes that you have to keep educating yourself on so you're being On top of things that may require either you spin up a lab in the cloud So you can better understand something that has a cost that's recurring or you have a physical location to put it in We have chose the physical location of help, but you don't have to it It's not like everybody needs a building I would say you need a professional address But you can get for very very little money at most cities here in the u.s There's usually places that offer this they'll offer you like a building address Not just a p.o. Box and do it for very little money where you don't actually go there You know, you can still work out of your house. You can still have all your Staff remote that's perfectly fine and acceptable But you know, it's just something you want to decide and you have to kind of decide that early Because if you are going to take on the burden of doing physical hardware like we do You have to have a place to set that up Or maybe you have a really big house and you can do it there and just all these little factors at the Worked into your equation when you're doing it and the last one is how's insurance looking brett brett came from the insurance industry for context That's my mainstay in background. Hey, we're you know, it Prices have gone up. Um, when you think about cyber security insurance now, this is Something that the insurance companies are struggling to really price and when insurance companies struggle the price things They just price them higher until they figure it out. Yep. So, you know, you those costs are are associated with every point of our pricing Yes, and also you've got to make a profit Right, you didn't come you didn't build a business. You aren't starting a business just to break even you also have to make a profit Uh, and and you know what you offer Um, your tool set your rmm Your employee cost other costs all have to come into that factor and then what's your margin? Yeah, that's important. You should be making some money if not your it's not a sustainable model It's not like i'm saying here be greedy or anything like that It's more about finding a sustainable model finding a good living that you can make out of this It does take a long time But these are some of the things I wanted people to think about so I can send them this videos We reply to how much do you charge or how much should I charge is actually the question I see in forums and things like that and so me and brett just wanted to kind of throw this out there Address it give you a couple ideas a couple things to think about on there for price points These are guidelines for a formula because I don't want to throw out a pricing out there because that's One very limited. It's going to change with markets labor rates You know if you are here in michigan where we are it costs a whole lot less to live here than it does in certain areas of like california Or west brett was from I mean it's crazy This the just the housing prices are so dramatically different from areas So those are all things a factor into what you should charge But I'd like to this as a guideline so you can at least have some ideas what to think about So you can start throwing things in there, but what are you offering tooling cost staffing cost? insurance building vehicles type cost and go and hopefully make money at the end of the day That's right. All right. So thank you all for listening This is coffee with tom and brett business talks and what we do every day And how we want to help you. Yeah, we're gonna try and do these every tuesday Don't hold us to it, but we're trying That's our it's in the calendar. We're struggling for names too So also leave comments down below if we if you have a good idea for what we should call this or other things You want to hear me and brett do read the comments. So thank you Thank you