Pricing Cybersecurity to Maximize Profit
Erick Simpson - MSP Expert, Influencer, Thought Leader
Multi-Award-Winning MSP Expert | Influencer | Thought Leader | 100 Most Visible Channel Leaders | #1 MSP Resource | Best MSP Blog | A Top Channel Podcast, A Top Education & Training Program, A Top Channel Consultancy
No matter how well you design and deliver your cybersecurity services, they won’t generate a profit—and might even cost you—if they aren’t priced correctly. This article provides proven, actionable advice to help Managed Services Providers (MSPs) establish the most profitable pricing for their cybersecurity offerings.
Pricing Cybersecurity MRR Services
Pricing monthly recurring revenue (MRR) cybersecurity services requires careful consideration of several key factors. To develop a pricing strategy that maximizes profitability, you must analyze your business across these dimensions:
Efficiencies, in particular, play a crucial role. If your service delivery is inefficient, your price points must be higher to maintain desired profitability.
Determining Your Predominant Business Model
Your business model significantly impacts your pricing strategy, target audience, and profitability. For instance, a product-centric model often faces challenges in transitioning to cybersecurity services, which require skills focused on:
On the other hand, MSPs with an established managed services practice may find it easier to market, sell, and deliver cybersecurity solutions efficiently and profitably. Understanding your business model’s strengths and limitations is essential when setting your pricing strategy.
Defining Your Cybersecurity Service Offering
To serve your clients effectively, you must carefully define your cybersecurity offerings. Different audiences will have unique compliance and security requirements, which may depend on:
Evaluate each potential service's priority, vendor alignment, and feasibility. Determine which services will form the core of your cybersecurity stack and align them with your target market’s needs.
Calculating the Cost of Service Delivery
A critical step in setting profitable prices is understanding your cost of service delivery. Follow these steps:
By summing these values, you can accurately determine the total cost of service delivery for each offering.
Establishing Retail Pricing
Setting retail prices becomes straightforward once you’ve calculated the total cost of service delivery. Determine the margins you aim to achieve for each service and establish your price points accordingly. Balancing competitive rates with profitability is key to long-term success.
Conclusion
Pricing cybersecurity services is a complex but critical task. Setting rates too low can erode profitability while setting them too high can deter potential clients. By following the strategies outlined here, you can confidently establish pricing that is both competitive and profitable, ensuring your MSP remains a trusted partner in delivering effective cybersecurity solutions.
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Catch Up on These Podcast Episodes:
Human Beings Suck at Probability: Erick and Rich discuss how MSPs can profit from pursuing the same ecosystem strategy that ConnectWise and N-able use to compete in the market for managed services suites, and how a disciplined approach to change management can help MSPs make big strategic initiatives like building an ecosystem manageable. Then, they’re joined by Mike Psenka, president and CEO of project management vendor Moovila, for a deep-dive conversation on challenges and opportunities in MSP project management. And finally, one last thing: A new AI-powered healthcare solution with a value proposition too icky to discuss here.
The Bear in the Neighborhood: Erick and Rich discuss new data from TD SYNNEX suggesting that while AI may be where the growth is in managed services security’s still where the money is, as well as how MSPs can use SLAs and KPIs to drive clients toward bigger, more expensive service bundles. Then they’re joined by Dave Russell, SVP of enterprise strategy at data protection heavyweight Veeam, for an insightful look at the blurring lines between backup and security, and what they mean for the channel. And finally, one last thing: how an apartment dweller in Sacramento discovered he’d been inadvertently paying his neighbor’s electric bill…for 18 years.
vAIO: Erick and Rich discuss a wave of private equity-funded vendor M&A activity due in 2025 and what it means for MSPs, as well as advice for building a strong company culture. Then they’re joined by Sam Valme of AvePoint for a conversation about AI-related opportunities for MSPs in data management. And finally, one last thing: a new AI-powered ETF that uses an LLM trained on the wisdom of Warren Buffett among others to build an investment portfolio all on its own.
100% of Your 50%: Erick and Rich discuss why private equity firm Thoma Bravo says Manny Rivelo is the right choice to be ConnectWise’s new CEO and three tips for improving customer retention. Then they’re joined by Sunny Kaila, CEO of IT By Design, to discuss his new book on how overseas technical workers can help MSPs grow faster, increase profits, and raise their valuation. And finally, one last thing: a new AI tool that threatens to put Erick and Rich out of their podcast-hosting job.
Transformational, Not Transactional: Erick and Rich discuss what ConnectWise buying Axcient and SkyKick says about the future of managed services suites and techniques for optimizing service delivery. Then in a two-part interview segment they’re joined first by Corey Kirkendoll of 5K Technical Services and Brian Weiss of ITECH Solutions for a look at how two leading-edge MSPs are incorporating AI into their client service roster. And finally, one last thing: The nightmare every parent who brings a four-year-old to a museum full of priceless artifacts dreads.
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