Managed Services 101
This article is really aimed at giving a concrete example of a managed service, and to explain why it’s better for everyone (you and your customers) while also being more profitable for you. Please suspend all disbelief, and set aside anything you’ve heard about managed services until the end.
In my mind a good definition of managed services is;
using tooling to automate simple tasks that are part of productizing your already valuable services into stable recurring reveneue that allows you to bill more while spending less time while also providing a “next-level” service to your customer.
So let’s dig in to some details on:
- Why backups are a good place to start
- How this can turn into recurring revenue
- The services we think make sense to be your first bundle
- Example pricing
- Tooling deep dive
Why do we care about backups?
I am just going to assume you already believe backups are important, and you’ve seen individuals and businesses lose important data before – so you know first hand how important it is.
Backups are still hard. If you want local copies, and online copies, and some level of confidence the backups are happening across multiple workstations and maybe also a file share – this isn’t the type of thing a non-tech can generally get setup. (Not in a way that can be fully trusted/monitored) I know this because in my years of being a computer repair guy, and even growing into being an MSP and supporting some pretty big businesses(for me that was 300~ employees, 20 servers~), it was still really hard for me to get backups to a point where I trusted them without having to check on them constantly.
This is also an easy sell to your customers because they do care about their data. Individuals want to know their family photos will be around forever. Business owners want to feel like they are taking necessary steps to protect their business from data loss, everyone already agrees that they want to invest *something* in backups.
What is out there?
We’ll just set aside tools like Dropbox/Google Drive, they are terrific, and if your users are really good about putting everything in there, backups might not be relevent to those folks. This article is for the masses of people that don’t fully get it, the people that can’t tell if a file is in Dropbox or in their Documents folder. Most of the time even if a business has a few people using Dropbox properly, there are still a handful of people that don’t know how, or think they do but still have files not being backed up.(or maybe regulated to not using these due to HIPAA/etc) You know who they are…
There are TONS of solutions out there, lots of ways to do this. If you have looked around a bit you’ve probably run into Carbonite, Mozy, idrive, ibackup, and many more. Maybe also free tools like cobian, or custom scripts – and business tools like storage craft and backup exec. Many of these tools do a great job, and you could accomplish the same level of confidence using these tools.
For my purposes they are lacking in the business model department.
If you are a traditional break-fix shop, or consultant, you probably use these tools already – and you probably do good backups for your customers. Let’s talk about a way to combine in some more services without you having to “do more work” so you are stepping the service up a notch, and rightfully charging a little bit more.
How do you make money
Affiliate Model
When it comes to the affiliate model the best I’ve seen so far is idrive and ibackup(business version). You signup as an affiliate and you get 25% of the revenue forever. (Thanks Chuck for telling me about this)
The consumer version has a free 5GB tier too, so you can install it and if they cross that 5GB mark and they sign up, you start making money at that point.
If you read this article and feel like it’s “just too much work” to go the managed backup route, fear not, it makes a lot of sense to just become an affiliate of idrive/ibackup and start making *some* money now. You will start making recurring revenue and we’ll be glad we could point you in that direction.
However, for the ambitious, if you want to move your pricing up a few notches, and move your margin from 25% to 93%, read on for how to run a truly profitable backup operation.
Managed Backup Service
Transitioning to “Managed Services” is a huge step in future-proofing your business and making you more profitable. It’s essentially about taking a basic break-fix business and packaging the services into broader packages to “productize your services”.
What is your most profitable area of your business? Service.
Let me give you a couple examples. How much is your hourly rate? $70/hr – $120/hr? Ok – let’s say you have a small business client that is an average user, maybe a small real estate brokerage office with 5 agents. These clients are everywhere – just think to yourself, if I asked so-and-so to put a doc in a Dropbox folder and share it to me, and they would struggle with that, they could be a potential managed backup customer.
Let’s say in this example that most agents do use DropBox properly for their personal docs, but a few of them also keep personal family photos outside of DropBox, and there is a network share that only backs up to a USB hard drive in the office that has most of the important work files.
In addition to that, 2 of the users also use QuickBooks desktop and they backup to a folder on their desktop, and “are supposed to” copy the backup file to the network share after each backup.
For the sake of the illustration, lets say this network share is about 150GB, and each user has about 15GB on their computer that isn’t in DropBox.
Now let’s say they get a cryptolocker virus, or the network share drive fails, or all the things you know can happen – something comes up and some files are lost.
“But we had good backups” – no, they had the bare minimum and it almost never works to do the bare minimum in backups. In backups, they have to be 110% or they are worthless. The rule of backups is, if it’s possible one file isn’t being backed up, it’s the most important file and you will lose it.
So now this client wants total peace of mind going forward, so they ask you to verify their backups are working every week. That means you remote into their office computers, or go visit them weekly – and verify the QB files are a reasonable size, and in the right place, and the USB backups are working, and maybe check that carbonite or whatever has recent backups of the USB drive. This might take you 30-90 minutes per week.
Imagine you were going to offer that as a service, what would you charge? (2-6hrs/month + travel)
$400/month?
$200/month?
That is valuable isn’t it? That client will now be 110% confident that their backups are PERFECT. Because you are good at checking, and you are doing it every week.
Productize It
Now – what if a combination of tooling and productizing could bundle this into an automated service, the price would be between the bare minimum from above, and your full billable rate, and almost the exact same benefits!
A combination of CloudBerry Managed Backups(the backups) and RepairShopr(the billing system): We provide tooling that charges them whatever you want – and it takes almost none of your time. Now you can scale your business. You are providing the FULL value, with almost none of the time spent. You can properly leverage your skills and provide more value to more customers. This is what managed services is about, and you can do the same thought exercise for your regular break-fix work for business customers.
This is your first managed service, combining great backups with your service to monitor and verify, and jump in when things aren’t working.
Think: Antivirus, Patches, Server updates/reboots, software updates (java/flash/etc), defrags, monitor windows event log for disk errors(drives about to fail).
An Example Managed Backup Product
Business Managed Backups
You provide world class endpoint backup software, you monitor it to make sure the backups haven’t stopped running, you monitor the backup space used to make sure their 150GB network share hasn’t just backed up 1GB after a year of running, maybe you also spot check monthly or so to double-check a list of critical files and read an error log. You automatically get a trouble ticket in RepairShopr when a backup hasn’t run for X number of days, and you contact the client and go take care of it for them for no extra charge.
The backups are fully encrypted, and the restore speed is unmatched. With CloudBerry restoring from Glacier/S3, you are going to be able to restore the entire backup same day. *Keep in mind Glacier has high costs for restoring, so check out our pricing calculator to see how that should be priced – or just use S3 (simpler formula for profit margin).
We’ve seen small businesses with 150/GB perfectly happy to pay $150/month for this type of peace of mind. $1/GB for storage sounds like a lot for “storage” – and yes, it would be, but this isn’t storage pricing, this is “Managed Backup Service Package” pricing. It happens to be per GB because that is the fair model for everyone. The client doesn’t want to pay for 1TB of backups and only use 150GB, that is wasteful, and everyone hates their cell phone plan where they get 500 minutes and then start paying hundreds of dollars for overages. (staying with the analogy – yeah, unlimited talk is better, you could easily do that here as well.)
Don’t let the pricing discussion go to price per GB as a way to compare, remember, you are bundling all those services that the other solutions are not.
Welcome to the future, and welcome to becoming an MSP.
Automated billing
With CloudBerry managed backup service your clients computers will be sending stats to the CloudBerry cloud so you can see how much they are storing, when it last ran, and if any errors occurred.
Now we will sync with them so we can map your CloudBerry ‘user’ (customers) to your RepairShopr Customers, and now we can do the billing. You can create a new type of recurring invoice that is CloudBerry-aware, and you can even choose between tiered or metered pricing for your customers.
We support both models of pricing, tiered and metered. You can have a plan that is $300/mo for unlimited, or whatever you feel works for your client. I prefer the metered model personally, you charge per GB and as they backup more, you automatically make more and more money each month.
The key to selling this is that you are monitoring the success/fail of their backups, and if anything happens to make the backups stop running, you get alerted and you’ll take care of it at no extra charge. This is how you sell peace of mind.
CloudBerry Tooling
CloudBerry has a full suite of backup tooling. Their products can backup locally or to the cloud. They allow you to use many online storage accounts like; Amazon S3/Glacier, Google Drive, Azure Cloud, etc. They have products for servers, VM’s, bare metal restore, SQL, Exchange, all the tools you would expect a mature backup software company to provide.
Goals
It’s a primary goal of us here at RepairShopr to help make your business better. We aren’t just building useful software – we want to help educate and also help you bring yourself to market. We try to help with marketing by building out the Marketr feature, and a Mailchimp integration. We find special pricing and good integrations that help make your business better.
