Why design a fee that falls?

Because a fee that rises with the customer's problems puts you on the wrong side of their interests. A falling fee, with margin held by reduced effort, keeps you on the same side.

Does it give me a rate card?

No. It gives you tiers, an effort split and a fee shape. What the fee is anchored to is yours; the playbook explains how to set it.

Tool

Application tiering model for managed services pricing

Sort a client estate into tiers that justify what you charge to support it, split across Core, Remediation and Kaizen.

The methodApplication tiering: Core, Remediation and Kaizen

Ships with MSP pricing model: price managed services per application, and is available on its own.

The application tiering worksheet sorts a client's estate into tiers that justify what you charge to support each application, and splits the work across three service elements, Core, Remediation and Kaizen, so the fee can be designed to fall as the estate improves. It is the working form of the MSP pricing model playbook: a way to price managed services per unit of responsibility rather than as a percentage of the customer's cloud bill, per seat or per head, all of which pay you more when the customer does worse. You use it to prioritise (prioritize) the estate before you price it.

The inputs are the list of applications or service units in scope, a score for each against the playbook's tiering criteria, and the state each one is in when you take it on. From those the worksheet assigns a tier, splits the expected effort between keeping it running, fixing what is wrong and improving it, and shapes a fee that steps down as remediation completes.

The outputs are a tiered estate, the effort split across the three elements, a fee shape over the life of the contract, and the conditions that trigger the tier-down clause. A worked example estate is filled in; it is invented and labelled as invented.

This is how we priced the managed service at DevOpsGroup. The model was not pure, there were exceptions, and the playbook says what they were. The worksheet is in development and comes with its playbook, MSP pricing model: price managed services per application. The waitlist is open.

What you will get

01A tier for every application in the estate, scored against stated criteria.

02The split of effort across Core, Remediation and Kaizen.

03A fee shape that falls as the estate improves, with the tier-down conditions written down.

04A worked example estate, invented and labelled as such.

Who it is for

Managed service providers and cloud firms pricing per application or per estate.

Founders selling an ongoing service priced on a proxy for customer spend.

Anyone whose commercial model rewards them when the customer does worse.

Questions

Is the worksheet available now?: No. It is in development and comes with its playbook, MSP pricing model: price managed services per application. The waitlist is open.
Why design a fee that falls?: Because a fee that rises with the customer's problems puts you on the wrong side of their interests. A falling fee, with margin held by reduced effort, keeps you on the same side.
Does it give me a rate card?: No. It gives you tiers, an effort split and a fee shape. What the fee is anchored to is yours; the playbook explains how to set it.

Terms this tool uses

Runs with

MSP pricing model: price managed services per application