The success of a managed security service provider (MSSP) relies heavily on the quality of service offered and its pricing strategy. MSSPs often strive to create flexible pricing plans to attract clients of various sizes and from different industries.
The following are some of the pricing models that MSSPs prefer:
- Subscription-based pricing: In a subscription-based model, MSSPs charge their clients a monthly or annual fee for the services provided. This approach ensures a steady revenue stream for MSSPs and simplifies budgeting for clients. It is particularly well-suited for services requiring ongoing monitoring and maintenance. MSSPs must clearly outline the scope of services included in the subscription to prevent misunderstandings.
- Tiered pricing: The tiered pricing model stands out as a favored choice among MSSPs. It provides MSSPs with the flexibility to create service packages that incrementally offer more comprehensive services as clients move up tiers. Organizations can select the bundle that best suits their needs and budget, typically categorized as Bronze, Silver, Gold, and Platinum. Bronze offers basic services at a pocket-friendly price, while Silver and Gold packages are more expensive, offering additional features such as on-site support and emergency assistance. For instance, Bronze may include basic remote support and updates, Silver adds on-site support, and Gold includes after-hours emergency support, alongside the services provided in earlier tiers.
- Value-based pricing: This is one of the most comprehensive models offered by MSSPs. In this model, MSSPs charge a flat fee for addressing not only the immediate pain points but also catering to the latent needs and other potential security risks of the client. Aligning pricing with the value provided by MSSP services strengthens the relationship with clients.
- Per-user pricing: This is an easy-to-quote pricing model in which MSSPs periodically charge their clients a flat fee based on the number of users covered under the contract, regardless of the number of devices being used. Organizations that have more devices but fewer users can leverage this pricing model.
- Per-device pricing: In this model, a monthly fee is charged for the quantity of devices that are being monitored. This model is popular because it's easy to show costs to potential clients. With this model, MSSPs can adjust the monthly fee when customers add more devices. However, it's tough to raise prices if customers don't add devices because any price increase will be noticeable to them.
- Hybrid pricing: Hybrid pricing combines elements of different pricing models, such as subscription-based and pay-per-user, to offer clients a customized pricing structure. It provides flexibility to accommodate various client needs and usage patterns, allowing for creative pricing solutions tailored to specific client scenarios.
- Bundled pricing: Bundled pricing consolidates several services into one fixed-price package, offering clients a comprehensive solution at a discounted rate compared to individual purchases. This simplifies clients' decision-making processes and enhances the perceived value of the MSSP's offerings, promoting a more holistic approach to cybersecurity.
- Custom pricing: This model involves MSSPs determining pricing on a case-by-case basis to accommodate unique requirements, industry regulations, or specific projects. It offers maximum flexibility to tailor pricing to meet clients' needs and helps differentiate MSSPs from competitors.
How to determine the right model
As an MSSP, choosing the right pricing model is pivotal for sustaining business. This involves assessing the following factors:
- Cost involved in offering services: Firstly, it is essential to assess the costs incurred in providing the services that MSSPs offer. This can include employee salaries, asset maintenance costs, and other expenses that MSSPs bear to ensure service availability.
- Scalability: Choose pricing models that can scale with clients' evolving needs and business growth. Scalable pricing ensures that MSSPs can accommodate client expansions without disruptions or the need for pricing renegotiations.
- Value alignment: It is crucial to align pricing with the value of services offered. If clients feel that the pricing justifies the value they receive, they will be more willing to pay to maintain security.
- Target market: Pricing can also be determined based on the target market segment. If MSSPs target small- and medium-sized enterprises, it's important to set moderate pricing considering their business size. Enterprises may be in a better position to afford higher prices.
- Market analysis: Conduct a comprehensive analysis of the competitive landscape and prevailing market pricing trends. This insight helps MSSPs position their pricing competitively while ensuring profitability.
