How To Minimize Confusion in Managed Services Contracts With These Customer Communication Best Practices

Pricing and billing are often the most important parts of a managed services agreement. But even among providers who prioritize transparency and strive to provide crystal-clear pricing, unique circumstances are bound to come up. 

It’s a question we shouldn’t hear from customers, but often do: “I thought that was included in our monthly price?” And we all know the uncomfortable feeling that follows. But pushback on pricing doesn’t have to lead to strife. Instead, use these difficult conversations to reestablish trust, transparency, and an open line of communication.  

In this blog, we’ll discuss best practices for difficult customer conversations – and more importantly, how to minimize the necessity for difficult conversations altogether.  

Communicate confidently to set the right tone with managed IT customers 

Nobody wants to give the impression they’re nickel-and-diming customers – that’s the antithesis of the managed services model. At the same time, managed services is a business. MSPs must ensure they’re being compensated for efforts and services not included in monthly support.  

If a customer isn’t willing to pay for services or offerings which weren’t factored into your initial price or cost analysis, they may not be a good long-term partner. Conversely, if you’re not willing to regularly evaluate your pricing structure, you run the risk of having an unprofitable account. If that happens, you may end up having to eventually “fire” the account, all because you failed to have an earlier conversation about what’s included and what’s not in your monthly support fee.  

In any conversation about pricing exclusions or adjustments, you should also take the opportunity to introduce the possibility of similar conversations in the future. Set expectations for your customers about how environments can change, therefore prices can change as well.  

Situations like this are a great opportunity to reestablish your scope of services and reflect on current sales processes to ensure the right messaging is given to prospective customers, too. This will help minimize confusion in the future.  

Minimizing confusion in managed services offerings  

Implement the following practices to create a smooth and successful sales process for your team and your customers.  

Be willing to have uncomfortable conversations with customers and prospects  

Your customer relationship will be off to a good start if you're able to confidently discuss pricing from the get-go. Make sure your sales team has a solid understanding of what’s included in your monthly support costs and are prepared to justify why and when certain items are beyond scope and may require additional fees. Document your most common out-of-scope instances and make sure all client-facing teams are prepared to provide an explanation if needed.  

Junior salespeople and startup MSPs may benefit from tools and training to help facilitate these conversations. Resources like our Collabrance white label sales and marketing tool kits, for example, include sell sheets and battle cards that may prove useful:  

• Fully managed IT services sales tool kit  
• IT support essentials sales tool kit  
• Managed security sales tool kit  

Be mindful of how your solutions are priced and what language you use during the sales and onboarding processes  

Does your customer know how they’re being charged – is it a flat monthly rate? Priced per-user? Per-device? Be careful about using phrases like “all you can eat support;” it’s a catchy proposition that may cover most issues, but you want to make sure you’re not setting improper expectations. There should be clear-cut, concrete definitions of your various offerings that you can refer back to if there is ever any confusion from customers or prospective customers.  

Standardize your technology and processes  

Technology that is out of warranty or outside your standard tech stack can be the cause of many issues. A good practice to avoid such issues is to establish minimum technology requirements for onboarding. Creating guidelines for your customers’ technology not only saves you from headaches in the future, it demonstrates to your customers that your MSP maintains a level of operational professionalism. 

Reviewing your technology requirements and standardizing your tech stack isn’t a one-time thing – it's something that should be regularly evaluated and discussed with the experts on your team. You should continuously educate customers and hold them accountable for things like regular hardware and software updates, and adopting more advanced cybersecurity technology as it becomes available.  

Make budget planning a regular part of the discussion  

Ask questions about the customer’s technology budget early and make budgeting discussions a routine part of your sales or onboarding process. Budget planning is something that should be revisited during quarterly reviews, as well.  This will eliminate a lot of questions related to billable work.  

Plan for pricing exceptions  

If you are going to make a pricing exception, have an established outline of the approach or exception-handling process. Consistency will go a long way with your administration team. Having to handle each dispute as a one-off case will increase the likelihood of billing errors, which will lead to upset customers and the potential of losing the account.  

How to address the most common out-of-scope circumstances 

Every provider has a different approach to determining what is and is not included in their monthly support. At Collabrance, we typically ask ourselves, “is this something new to the environment?” If the answer is yes, the time needed to scope and implement is most likely billable. Other common billable instances include:  

• New hardware equipment or software installations 
• Location changes – moves or add-ons  
• Upgrades to major software applications including operating system upgrades 
• Migration services - data, cloud, email, etc. 
• Hardware failures and software failures outside a manufacturer’s warranty (warranty expirations are good leverage to ensure technology refresh cycles are occurring on schedule, to limit financial and labor risks)  

Other situations may vary, depending on your business’s approach and pricing methodology:  

• Onsite support  
• After-hours support  
• Disaster recovery – ransomware, natural disasters, etc. 

Review documents and processes to confirm pricing and billing consistency 

To cover your bases – and protect your customer relationships – it's important to regularly review documentation for changes and up-to-date information:  

• Agreements, including scope of work 
• Onboarding materials for customers 
• Sales process – anticipate what may fall out-of-scope based on your discovery process, and be sure to address it prior to signing new customers  
• FAQs – a great question to include is, “what is and is not included in monthly support costs?” 
• Change of network 
• User pricing 

Get it in writing with a comprehensive managed services agreement  

A fixed managed services agreement provides a framework for you to outline your offering in detail and set the provisions for your working relationship with the customer. It can also help you navigate a dispute if one does arise. Components of a strong managed services agreement may include: 

• Terms of service, including expectations of all parties to deliver IT services to the customer 
• Fee schedule  
• Customer selected services with detailed descriptions  
• Onboarding requirements 
• Termination clause  

Be sure to seek legal consultation to make sure the right contractual language is used throughout your agreement. A well-written managed services agreement is an indispensable tool for growing your managed IT business.  

Standardization plus clear communication equals MSP success 

When it comes to pricing and billing, the bottom line is to be upfront and spell it out – clearly, and early-on. Introduce the most frequent out-of-scope services during the sales process to ensure alignment, versus waiting until confusion arises and causes frustration with both parties.  

If you collect a pool of customers who expect reliable service delivery but aren’t willing to pay, your managed services business will inevitably suffer. Establishing clear communication and setting proper expectations from the start will help ensure profitability and happy customer relationships for the life of your business and theirs. 

Collabrance provides white glove sales, marketing, and solution support for MSPs, among other value-adds. To learn more, get in touch with a member of our team.