What does your Service Level Agreement look like?
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@BRRABill said:
@scottalanmiller said:
That sounds like a scam to me. Why would someone pay to have no one do anything?
There is lots being done:
windows updates
virus updates
any required maintenance
And of course the monitoring of all said events.It's just all automated for the most part.
I understand that there is stuff to be done. But if the MSP isn't doing it, why would someone be paying them to do it?
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@scottalanmiller said:
I understand that there is stuff to be done. But if the MSP isn't doing it, why would someone be paying them to do it?
They are responsible for getting it done. They just don't devote very much tech time to it once it is set up. There is no need to.
It's the selling point of all the RMM solutions.
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@BRRABill said:
@scottalanmiller said:
I understand that there is stuff to be done. But if the MSP isn't doing it, why would someone be paying them to do it?
They are responsible for getting it done. They just don't devote very much tech time to it once it is set up. There is no need to.
It's the selling point of all the RMM solutions.
Selling RMM is selling a service. That's not hours, that's SaaS. You are paying for RMM access and licensing and whatnot. That's unrelated to billable hours, SLA, etc.
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@scottalanmiller said:
@dafyre said:
That's not to say don't use contracts. But write them in such a way that everyone understand them and is on the same page when they are signed. So you can say "Yes, we will work with you..." And if / when the customer says "We no longer wish to work with you," then that is okay too.
Any idea HOW you can even do that in IT? I would say it is literally impossible. If you use technical terms, the business people cannot understand. If you don't use technical terms then you can't be sure what is meant. I honestly have no idea how that could even be done.
It's simple. Flat hourly billing... for ANY work done... charge your hourly rate. It's not $35 an hour for helpdesk type support, and $135 an hour for server-side support... Make it say... $75 an hour for everything. Contract states:
"All work done shall be billed at the hourly rate of $75 an hour."
No technical terms, IT People understand it, Business people should understand it, finance people should definitely understand it..
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@dafyre said:
@scottalanmiller said:
@dafyre said:
That's not to say don't use contracts. But write them in such a way that everyone understand them and is on the same page when they are signed. So you can say "Yes, we will work with you..." And if / when the customer says "We no longer wish to work with you," then that is okay too.
Any idea HOW you can even do that in IT? I would say it is literally impossible. If you use technical terms, the business people cannot understand. If you don't use technical terms then you can't be sure what is meant. I honestly have no idea how that could even be done.
It's simple. Flat hourly billing... for ANY work done... charge your hourly rate. It's not $35 an hour for helpdesk type support, and $135 an hour for server-side support... Make it say... $75 an hour for everything. Contract states:
"All work done shall be billed at the hourly rate of $75 an hour."
No technical terms, IT People understand it, Business people should understand it, finance people should definitely understand it..
Oh okay that's what we do. I thought that you were saying to make contracts that were easy to read.
The problem comes in when companies want predictable cost and flat rate billing. It's understandable that they want IT as a service.... but how do you make that work without introducing contractual problems?
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@scottalanmiller said:
@dafyre said:
@scottalanmiller said:
@dafyre said:
That's not to say don't use contracts. But write them in such a way that everyone understand them and is on the same page when they are signed. So you can say "Yes, we will work with you..." And if / when the customer says "We no longer wish to work with you," then that is okay too.
Any idea HOW you can even do that in IT? I would say it is literally impossible. If you use technical terms, the business people cannot understand. If you don't use technical terms then you can't be sure what is meant. I honestly have no idea how that could even be done.
It's simple. Flat hourly billing... for ANY work done... charge your hourly rate. It's not $35 an hour for helpdesk type support, and $135 an hour for server-side support... Make it say... $75 an hour for everything. Contract states:
"All work done shall be billed at the hourly rate of $75 an hour."
No technical terms, IT People understand it, Business people should understand it, finance people should definitely understand it..
Oh okay that's what we do. I thought that you were saying to make contracts that were easy to read.
The problem comes in when companies want predictable cost and flat rate billing. It's understandable that they want IT as a service.... but how do you make that work without introducing contractual problems?
Provide them X hours of support at a flat rate every month.
If they go over X hours, then they get charged the hourly rate..."We will provide up to 20 support hours per month to your company for $1,200 per month. All work done will count against your 20 support hours per month. Any work done that exceeds the 20 support hours per month shall be billed at $75 per hour. Support hours refresh on the first day of every month."
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Do do you bill the RMM SaaS service separately?
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@BRRABill said:
Do do you bill the RMM SaaS service separately?
I will not say that we would bill separately in all cases, but we have in the past in all cases of which I know (I don't see those agreements but sometimes know about the details.)
But it would be okay to have SaaS and labour rolled into a single line item, it's that it is being powered by two different things that is important not how it appears in writing necessarily.
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@dafyre said:
Provide them X hours of support at a flat rate every month.
If they go over X hours, then they get charged the hourly rate...And there are the issues. Either the vendor is encouraged to do less work since the billing is flat or to work more slowly or to inflate the number of hours needed. This is better than some agreement types for sure, but it is still not very good. It doesn't protect against big issues which is what companies tend to want insurance against and it wastes effort month to month making a service that is very expensive while not delivering on the desired need. All this really is is billable hours with a minimum.
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@dafyre said:
"We will provide up to 20 support hours per month to your company for $1,200 per month. All work done will count against your 20 support hours per month. Any work done that exceeds the 20 support hours per month shall be billed at $75 per hour. Support hours refresh on the first day of every month."
Everyone that I know that bills hourly offers this, but it is just a way to up the guaranteed hours on one side while potentially getting a discount on the other. Doesn't cover what MSP customers are using the MSP model for, though.
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I don't think it's black or white.
Like having a SLA or paying for X hours means you're getting screwed 100%. It's another reason to pick a good company to partner with.
It's no different than a warranty. Why get one? Just pay hourly. It's nice to have a budget item that I pay $X for IT, and know I am done with it, and covered.
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@BRRABill said:
It's no different than a warranty. Why get one? Just pay hourly. It's nice to have a budget item that I pay $X for IT, and know I am done with it, and covered.
But as hardware shops know, warranties are the best way to dupe customers. Always sounds good, never is good for them. There are cases where they make sense... but almost never.
SLAs are, by their nature, adversarial.
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@BRRABill said:
Like having a SLA or paying for X hours means you're getting screwed 100%. It's another reason to pick a good company to partner with.
No, but I know of no situation where an SLA is good. You can come up with unique cases where it didn't turn out to be bad, but can you come up with any where it is good?
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@scottalanmiller said:
But as hardware shops know, warranties are the best way to dupe customers. Always sounds good, never is good for them. There are cases where they make sense... but almost never.
SLAs are, by their nature, adversarial.
Interestingly, when we wanted to get into the computer consulting space, we were planning to do what you wanted to do, just bill for hours, but it didn't seem to make any sense financially, because you can't guarantee yourself income. That's what drove us to the MSP/RMM space.
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@BRRABill said:
@scottalanmiller said:
But as hardware shops know, warranties are the best way to dupe customers. Always sounds good, never is good for them. There are cases where they make sense... but almost never.
SLAs are, by their nature, adversarial.
Interestingly, when we wanted to get into the computer consulting space, we were planning to do what you wanted to do, just bill for hours, but it didn't seem to make any sense financially, because you can't guarantee yourself income. That's what drove us to the MSP/RMM space.
And this is what drives the business side of an IT Service Provider or MSP... Knowing what your income will be, and figuring out how to grow it by adding more clients (not hours to existing clients unless they ask for it).
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@BRRABill said:
@scottalanmiller said:
But as hardware shops know, warranties are the best way to dupe customers. Always sounds good, never is good for them. There are cases where they make sense... but almost never.
SLAs are, by their nature, adversarial.
Interestingly, when we wanted to get into the computer consulting space, we were planning to do what you wanted to do, just bill for hours, but it didn't seem to make any sense financially, because you can't guarantee yourself income. That's what drove us to the MSP/RMM space.
That's the tough thing.... you need customers who look at you as a partner to make it really work. Flat rate where you make tons of money for not providing labour is the easy way to make it work - but it also means customers are paying for nothing most of the time and often all of the time making it very hard to justify the service.
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@dafyre said:
@BRRABill said:
@scottalanmiller said:
But as hardware shops know, warranties are the best way to dupe customers. Always sounds good, never is good for them. There are cases where they make sense... but almost never.
SLAs are, by their nature, adversarial.
Interestingly, when we wanted to get into the computer consulting space, we were planning to do what you wanted to do, just bill for hours, but it didn't seem to make any sense financially, because you can't guarantee yourself income. That's what drove us to the MSP/RMM space.
And this is what drives the business side of an IT Service Provider or MSP... Knowing what your income will be, and figuring out how to grow it by adding more clients (not hours to existing clients unless they ask for it).
And why MSPs need to be very large to provide these kinds of service effectively - they need to do it at scale.
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This is a surprisingly lively discussion of SLAs
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So if i understand correctly, the best approach is to charge an hourly rate no matter if you do servicing for desktops or servers, based on calls from the customer. What i didn't really understand is what about the regular maintenance works you do for the clients? Like what mentioned previously, av scan, patch management, other maintenance tasks etc which we do as part of our ongoing management. Does it also covers under the hourly rate? If so how do we agree with the client on the billing, just calculate the hourly rates used for all these and send out a bill on monthly basis? The only difference on the bill would be when there is something broken, or new additions to the existing setup i believe?
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@Ambarishrh said:
So if i understand correctly, the best approach is to charge an hourly rate no matter if you do servicing for desktops or servers, based on calls from the customer. What i didn't really understand is what about the regular maintenance works you do for the clients? Like what mentioned previously, av scan, patch management, other maintenance tasks etc which we do as part of our ongoing management. Does it also covers under the hourly rate? If so how do we agree with the client on the billing, just calculate the hourly rates used for all these and send out a bill on monthly basis? The only difference on the bill would be when there is something broken, or new additions to the existing setup i believe?
So I would say that best practice is to tailor to the situation. That being said... overall I believe that hourly is the best with options like minimums, pre-arranged work and estimates and similar. So having, say, a forty item maintenance task list and a pre-arranged minimum and range of hours and some flexibility for addressing issues or special items (we found something that needed special attention but was minor so escalation would be ridiculous) would often be ideal.
But this is "optimum for the best relationship" and still has caveats - the service provider still is encouraged to find extra work to do, for example, and is not incentivized to automate what can be done manually or to invest in tooling to reduce labour as labour means profit and tooling does not.
There is no singular best answer. Part of the goal of moving to an MSP or ITSP model is to improve over internal staff. Internal staff are paid on an hourly system with minimums (e.g. hourly) or flat rate like an MSP (salary.) The same issues exist internally but with slight differences.....
