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Welcome to Episode 316 of the MSP Marketing Podcast with me, Paul Green. This week…

• MSPs: Do this daily… or fall behind: Find and protect a little bit of time every day to learn something that makes you better. Because if you want your MSP to grow, you have to grow first.
• Turn $1 into THOUSANDS for your MSP: Let me tell you the true value of every dollar of new MRR – monthly recurring revenue – that you generate. And how one small upsell today could still be paying you in 10 years time.
• Why your MSP doesn’t charge higher prices: There are all sorts of psychological and emotional reasons that MSPs don’t put up their prices. My guest is an expert at pricing and positioning, and he’s going to tell you how you can name your price.
• The Marketing Minute: Don’t miss this simple tip to reach your dream clients.

MSPs: Do this daily… or fall behind

The amount of information and ideas is increasing all the time, and it’s so easy as an MSP to feel like you are falling behind. But you don’t have to be a slave to all the digital noise out there. In fact, it’s much more powerful if you block it out and instead find and protect a little bit of time every day to do this core activity. Let me tell you how to ignore the noise, what this activity is and why the world’s most successful MSPs do this every day.

Let’s talk about learning. Now, wait, before you roll your eyes and think, oh Paul, I just don’t have time for training, stick with me for a second because I’m not talking about signing up for an MBA or sitting in a three day marketing seminar with bad coffee and uncomfortable chairs.

I’m talking about setting aside 30 minutes a day to learn something that makes you better… as a business owner, as a leader, as a marketer, as an MSP.

Half an hour, that’s it. I mean, it doesn’t sound much, but over a year, even if you’re just doing it weekdays, that’s well over a hundred hours of focused improvement. Imagine what you could learn, what you could change in that time. And the best part is, learning doesn’t have to be formal. In fact, the best kind of learning often isn’t formal. You could be listening to a business audiobook just while you’re walking the dog – that’s learning. You could be watching a great YouTube channel or listening to or watching a podcast while you’re making lunch – that’s learning too. You could go for a coffee, sit outside and actually read that book that you bought six months ago. You know, the one that’s been sitting on your desk looking at you accusingly gathering dust. All of this counts.

The point isn’t what you are learning or how you are learning it, it’s that you are building a habit, a routine of small daily improvements. Because that’s how the most successful business owners think. They’re constantly upgrading themselves, not in big leaps, but in consistent steps. And as you run an MSP, there is a lot to learn. Marketing, leadership, sales, strategy, systems, time management. I mean even personal stuff like mindset or communication. Every small improvement in all of these areas has a direct effect on your business, which has a direct effect on your personal life and your earning capacity.

Here’s what I recommend. Treat your 30 minutes of learning as non-negotiable. I mean, literally put it in your calendar, protect it like it was a client meeting, because in a way it is one, it’s a meeting of you with your future self. And if you’re not really sure where to start, just pick one thing that’s holding back your business right now. Maybe you struggle with consistency in marketing, or managing your team, or handling sales conversations. So find a book or a podcast or an online course that helps you with that.

And remember, you don’t need to finish it all in one go. Just start. Do a chapter a day, one chapter one episode, one video at a time. And soon you really will find that your thinking has leveled up. You’ll be coming up with new ideas, making better decisions and solving problems faster, all because you made that small daily commitment to get just a little bit better.

So here’s your challenge then get in your calendar right now, schedule 30 minutes every day, every weekday at least for learning. And this could be first thing in the morning, it could be your lunch break or it could be after work. Just get it in the calendar and make it happen. Because if you want your MSP to grow, then you have to grow first.

Turn $1 into THOUSANDS for your MSP

We all know that monthly recurring revenue is key to your success as an MSP, but have you ever sat down to work out just how valuable it actually is? Let me tell you the true value of every dollar of new MRR that you generate. And once I do, you are going to look completely differently at things like quarterly business reviews and client update meetings.

MRR is one of the best things about your MSP business model, but I bet you’ve never thought about it like this…

Imagine you wanted to keep building your MSP for 10 more years and then you’re going to exit, you’re going to sell the business. And today you sell one additional service to one of your clients, and it’s just like $4 per user per month and they have 10 users. So that works out at $40 of new recurring revenue, four users at $4 a month, $40 a month of recurring revenue. You with me so far? That’s $480 a year.

Now if they keep buying that over the next 10 years, that of course adds up to $4,800 of revenue, right? And that’s some lifetime value there in a $4 a month service. But this gets even better. Let’s say that you buy this service for $2 per user per month. So you are making a 50% profit margin and $2,400 of gross profit across the next 10 years, which is so cool. Now, I know you’ve got to keep the business for 10 years to deliver it, but it’s not like you have to do anything. I’m assuming you are buying that in at $2. You are selling it out at $4. We’ve not even talked about price rises here, $2,400 of gross profit over the next 10 years for doing nothing.

And you know what? When you come to sell the business, this puts even more money in your pocket. So let’s assume when you come to sell it, you get one times annual recurring revenue. So you take a whole year’s worth of monthly recurring revenue. And a lot of MSPs when they sell, they sell for one times annual recurring revenue. So that simple upsell is going to add another $480 onto your sales price because if you think about it, that annual of that $4 x 10 users x 12 months is $480. So that’s going to go onto the money that is given to you to buy the business off you.

All of that cash, huge amounts of cash from selling one $4 a month service. So tell me again, why aren’t you selling more monthly recurring revenue services to your clients every single day? If you just think about it that way, that one small upsell today could still be paying you in 10 years time and make your business more valuable when you come to sell it. Compounding doesn’t just work in finance, it works in your MSP too. So a question for you. What could you sell today that your future self will really thank you for?

Why your MSP doesn’t charge higher prices

Featured guest: Justin Neale spent 25 years in the aviation software space, supporting the world’s airlines and building global customer service teams before founding the Value Alchemists. He now helps MSP owners unlock their biggest profit opportunity, getting their pricing right. Through understanding customer psychology and value perception, he helps businesses increase their profits without losing customers.

If you can be the most expensive MSP in your area, then you make more profit for the same amount of work, which is beautiful when you hear it said like that. But I know that there are all sorts of psychological and emotional reasons that MSPs don’t put up their prices. The same reasons that stop you being the most expensive in your marketplace. My special guest today is an expert at pricing and positioning, and he’s going to tell you right now how you can name your price.

Hi, I’m Justin Neale. I’m the founder of the Value Alchemists.

And thanks so much for joining me on the podcast, Justin. We met a few months ago, I seem to remember at the Managed Services Summit, which is a show here in London in the UK, and there were three or four speakers in a row. You were on stage, then there was another speaker, and then I was on stage. And we got to talk backstage a little bit, and we were comparing notes and I loved what you had to say about value, and I think all of the MSPs listening to this on the podcast or watching this on YouTube are going to love what you have to say as well. So before we jump into demonstrating value and why MSPs are so bad at demonstrating value and therefore so bad at collecting the extra money that you get from demonstrating huge value, let’s first of all just dive back into your career, because you’ve come out of a big long corporate career in the last few years.

That’s right. So I was in IT specifically the aviation space for 25 years, last with Airbus Group and supporting all of the airlines around the world with their software solutions. But a big piece of that, and one of my roles was we did the revenue management and the pricing for the airlines, which was how I really got started looking at the psychology behind pricing and that kind of fascinating world of how much will people pay for something, and it can be wildly different depending on the situation. And so when I left corporate life, I kind of thought, well, what problem can I help other businesses solve, and pricing was one of them.

That’s so interesting. So that’s just opened a whole new area of knowledge in my head. So it never occurred to me that the manufacturers of the planes would actually help the airlines with pricing. So in terms of that kind of assistance, is it a case of, right, you’ve got your standard Airbus A360 or whatever the model is, and you could get 400 seats in or you could get 380 in, and obviously that has impact on fuel and impacts on revenue and stuff like that. Was it that kind of modeling or was it a much more simplistic pricing advice?

That software product was in another aviation company, but on the Airbus side of things, the airlines themselves will look for ways to differentiate and ways that they can look different to their competitors and make it very difficult to be compared on price. And you’ll only really see that when you start to try to find a flight and you’ve got competitive airlines that you could choose from. But equally, the moment you choose which cabin class you choose, the ancillaries, there are thousands of permutations for essentially the same thing that is going to take you from A to B. And yet the price point can go from 25 pounds on a cheap economy ticket to thousands of pounds for a first class ticket for essentially the same thing.

Yeah, it’s fascinating. And I think airline pricing, I mean, it’s almost an obsession isn’t it, for people who like to travel. Here in the UK we have two budget airlines that are in competition with each other and anybody in the UK or who has traveled into the UK or through Europe using either EasyJet or Ryanair, which are the two sort of big budget airlines here, will know that an EasyJet is cheap. I don’t mind cutting corners and having to carry my bag on and not have any coffee and all of that stuff. And then you’ve got Ryanair, which essentially offers exactly the same service, but there’s something about it that seems cheaper. Cheaper in that people will choose it because it seems to be a cheaper way to fly, but you also feel that they care less. I’m sure I’ve read something somewhere that Ryanair was threatening to charge its customers to use the toilet on the plane. I’m sure that’s not legal. So when you talk about airlines differentiating themselves in anything other than price, that kind of positioning in my mind, that may not be the position that everyone has of those particular airlines, but is that the kind of thing that you’re talking about?

Yeah, absolutely. And when you look at airlines differentiating on cabin classes, for example, but it’s not just that, it’s things like priority boarding, giving you the fast track security, but then if you’ve got fast track security, you’ve then got more time in the airport. So then you want lounge access. So it’s a bit like going to get a higher car when you go to the car rental desk. Yes, you get the car rental for $15 a day, but by the time you’ve left, you’re paying $100 a day because you’ve got the tyre protection, you’ve bought a tank of fuel, you’ve got the enhanced insurance, and you might drop it off at a different airport or have late check-in. There’s no end of the ways, but they’re always selling you things that you want at that point in time and they’re giving you that core service initially, but then it’s very easy for them to upsell everything else because actually they’re solving the next problem for you and it’s a step along the way. And I think this is where there are a lot of those models which I’ve seen in that aviation space, which apply brilliantly across other industries. It’s just that pricing maturity maybe isn’t just there yet.

Yeah, that’s really interesting. The example you just gave there of the car hire is right at the beginning of Alex Hormozi’s newish book, which is called $100M Money Models, which I don’t know if you’ve heard of, Justin.

Oh, I’ve not read that one yet. I need to, that’s on my list.

It’s going to explode your head because everything Alex Hormozi does is fantastic. And I think he’s written a book that’s right in your world. He was selling bundles of 200 of those per person. So have a look on eBay. There’s bound to be some cheap ones on eBay, which is interesting.

I’ve read his first couple, but yeah, not that one yet.

Oh, if you love those, you’ll definitely love this. So let’s take this pricing and value idea and then transfer this over to MSPs because it would be very easy as an MSP owner to listen to this and say, well, yes, you rent a basic car and then they upgrade you to a better model and they upgrade you to the insurance and they say, would you like us to fill it with petrol or gas for you? And you can again see with the airlines that I’m happy to pay extra for priority service and express check-in and more legroom and all of that stuff. But when you apply that in a B2B sense and you look at that from an MSP’s point of view, where are the upsells there? Where is the applicable opportunity to add value and bump the price up?

The majority of MSPs look like they do the same thing as one another. So you end up with MSPs competing purely on price because it’s very hard for people to understand what’s different.

And so where it really comes into play is when you start to really look at niching down and thinking about what problem do I want to solve? But more importantly for who? So if we take the case of veterinary practices, for example. Lots of people have pets, especially post COVID, everyone seemed to get a dog. But veterinary practices have their own specific software they use, their own specific kind of ways of working, their own specific challenges. Now, let’s say you are an MSP and one of your niches is veterinary practices, actually your knowledge and understanding of the tools they using their operational constraints, how important it is that if that system goes down or their access to that system, they can’t check in any patients, they can’t quote any work, they can’t do anything. And speaking their language, understanding their problems and being able to tailor your service very specifically to their requirements means that the conversation isn’t about price anymore. So they can’t really compare you to anyone else anymore because no one is speaking that same language. And if you can solve a problem for them, then you can charge a significant premium for it.

Now, I believe that many MSPs will perceive that all MSPs are already doing this because they are naturally problem solvers. But in your experience, do you find that that’s not the case? That actually a lot of MSPs know that they can solve problems, but they don’t actually have that conversation with the clients.

Yeah, and also they’re trying to go too thin and too wide, so they don’t want to limit themselves, so they tend to sort of offer their services to almost anyone. But that makes it a little bit like trying to, the example I think I used on stage was bottled water. If you said, I’m going to go into the bottled water market, you wouldn’t get any investment, no backer is going to say to you, that’s a great idea it’s an underserved market, because you can go into any grocery store and you can buy bottled water for a few cents. And yet back in 2017, Mike Cesario created this amazing brand concept of Liquid Death, which is just canned water. But what he did was he could see that there was an underserved part of the market. People who didn’t want to turn up at a party, they weren’t drinking beer, they wanted something though that represented a bit of a cooler image and a bottle of Evian wasn’t really going to cut it. So he created this great concept. People loved the concept, so he actually made the product and he’s able to sell canned water at the same price as beer. And for me, that’s a fantastic example of if you solve a problem, people will pay a premium, and in this case he’s charging 10 times the price that you could buy just a basic bottle of water for, but it’s exactly the same product. There is nothing different apart from the packaging and how it’s positioned.

So I suppose would the MSP equivalent of that be something like 24/7 support? So you can say to a business owner or a business executive, look, we’ve got our base support hours. It might be 8am to 6pm but we know that you work, we know you work evenings, we know you work weekends, and we never want you sat in front of a computer that is giving you trouble and you can’t reach out for help. So we can offer you 24/7 support. It’s a bolt-on or it’s part of the service or whatever is the case. And obviously that gets offshored or wherever you get the extra help desk service from. But would you say that that’s the equivalent where you’re still essentially selling the same as someone else, but because you are looking at it from the customer’s point of view and you are looking at what their potential problems are, and you can see them thinking, oh yeah, actually, if I’m up finishing a presentation at 9pm on Sunday night and I can’t print, I want to be able to get that sorted on Sunday night and not have to wait until Monday morning. Is that the kind of the MSP equivalent of that?

I would go even deeper. I would say that it’s actually about getting really under the skin of the customer. So one of the MSP clients I worked with works with car dealerships. So dealerships have dealership management systems, so centralised software systems, but understanding how those work, the connectivity, making sure that they’re accessible all of the time, especially at weekends when there’s a lot of footfall into the showrooms, but also how you price your service to those customers. Because within a dealership, you’ve got people who are primarily just in the dealership, you’ve got a lot of drivers who’ll be delivering vehicles. They don’t need the same service as the people that are in the office. And then you’ve got people who are out and about travelling, maybe looking at potential acquisitions. You’ve got different profiles of users. Now, if you’re an MSP and you want to target car dealerships, getting under the skin, understanding the types of users that customer has, the systems they’re using means that you can build a price point and a service which is an exact fit for their needs, which means if that car dealership ever wants to look at an alternative MSP, nothing will quite look the same because your pricing, everything that you do is tailored to them.

Now the reality is you could have two or three niches. You don’t have to have just one. You could serve other customers, but packaging your service to solve a specific problem for that customer means that you can actually do something which improves your margins, but also means that your customer gets exactly what they need and they love that.

Yeah, that makes perfect sense. So Justin, what do you actually do to help MSPs?

First thing, it depends on the problem they’re trying to solve. For some, they just haven’t raised their prices in years and they’re terrified of doing it, and they think all their customers will leave overnight. And it’s really working out with them how we do the price increases in a way that ensures that it’s communicated properly, it’s all about value as opposed to apologising for doing it. That’s quite often a use case I come across with MSPs. Then the other one is helping them to find that unique positioning that enables them to differentiate themselves from everyone else. It’s normally they’ve grown to a certain size, but they’re not sure really how to go much further. So I work with them to say, well actually, look, you are brilliant at doing this and if we look at your customer base, you’ve got this niche already, why don’t we actually work out how to package your services, look at your tech stack and actually build something which just says, yes please, to those clients and lets you stand out and market differently and moves the conversation away from price.

Yeah, I love that. And you’re absolutely right, all MSPs look the same to the uneducated business owners and managers that are looking for them. And it’s really interesting what you say about price increases. Increasingly, I see that there are two types of MSP, there are those that have still got the prices from 2017 because, exactly as you said, they’re terrified they think that all the clients will leave them. And then the other side is the MSPs that put the price up every year by x percent, and it’s almost built into the contract and it’s a completely different mindset. And of course, the ones that put the price up every year, there’s just more cash in the business. And of course, when there’s more cash, you can grow the business. You can have a better life as the owner. It’s more fun to run. It’s certainly more fun to run when there’s more cash in the business.

Justin, thank you so much. I feel like you have a lot more to say about this subject. So I think we’ll get you back on the show at a future date. Just briefly tell us, you’ve explained what you do to help MSPs, what’s the best way to get in touch with you? Give us your website address and the best way to get in touch.

So valuealchemists.com is the website, but the best way to get in touch with me is just go straight to LinkedIn, just search for Justin Neale.

The Marketing Minute

Hi, this is Brian Hoppe with Brian Hoppe Coaching, and my tip for today is why don’t you put together a list of the top 100 clients that you would love to do business with. These are your perfect clients. These are the clients that in the most ideal world, you would love to be able to do business with them. Just put together a list of a hundred of these. Most people have never done this, but if you purposefully put together a list and then systematically every day, just take five minutes and reach out to one person on your list, see if you can get an introduction. Email them, call them, connect with them on LinkedIn, shoot them a message, send them something in the mail. Do one reach out every single day to somebody on your list and you will start to see really, really great things happen. So that’s my tip for you today. Put together that list of your Dream 100 clients and start reaching out.

Mentioned links

• This podcast is in conjunction with the MSP Marketing Edge, the world’s leading white label content marketing and growth training subscription.
• Join me in MSP Marketing Facebook group.
• Connect with me on LinkedIn.
• Connect with my guest, Justin Neale, on LinkedIn, and visit the Value Alchemists website.
• Connect with my Marketing Minute contributor, Brian Hoppe, on LinkedIn.
• Mentioned book: $100M Money Models by Alex Hormozi
• Got a question about your MSP’s marketing? Let me know.