Repair Volume and Break Even Point - Is this Feasible?

[pctechit]

So I have calculated a loose pricing structure for my new Managed Services contract initiative and I would need 200-300 clients under contract to bring home my goal profit. The majority of the work under these contracts would be remote with very little on-site (clients may only get 1 on-site per year).

I am a "one man band" in a city with 6+ million people (Phoenix)...

Since the majority of my PC maintenance is automated on these plans... I estimate that I will give each client 3.5 - 6.5 hrs. per year (depending on contract)

What are your thoughts about the feasibility of these numbers? Can I safely work on 200-300 systems in a year... what kind of volumes to you see?

 

[Crgky127]

I'm just ball parking here not based on any evidence, but you might want to consider raising the price and hours and lowering the number of customers. Partly due to most people liking more face time, and partly due to reducing the amount of administrative work involved in keeping track of that many customers/invoices/accounts/etc.

Having said that, I am reminded of a friend of a friend who has one big client which makes up about 10% of his business, and the client basically strong arms him into whatever price they want to pay. Having a large number of clients means that one person being late paying a bill won't hurt much, though it does mean there are more clients that could do that. The best of both worlds is to have multiple levels, like gold/silver packages.

 

[pctechit]

Thank you for your thoughts...

I should have prefaced that for now, this particular Managed Services is directed towards the residential side of things. The plan is in 3 levels already, ranging from $35 - $55 per month I am timid to go any higher on the residential side of things.

Some may ask why Managed Services on the Residential side? I feel that the same model for business MSP's can be scaled down and successful for residential. I currently work the business side of managed services, but my goal is to open a repair shop someday. I like to have the 9-6 hours and be able to lock the shop until the next day type of job. Currently, I get phone calls from business clients at 3 and 4 in the morning and because of the "all you can eat" business model they expect service, and I am not even the owner... which is why I get the calls.

Does the residential side really follow the more face time model too?

 

[Crgky127]

My view is probably skewed as I wouldn't trust many people with taking care of my home network, but face (or even just phone) time could be equally or even more important for residential. As long as you don't come across as the mysterious figure that they forget why they are paying yet is still 'in their home' in a way all the time, you should be fine.

I've been thinking about pricing for residential MSP also, and I think you have the right idea. I heard the (probably now out of date) statistic that the average consumer replaces a part or the whole computer once every 18 months. Assuming an average of 600USD per computer, that means 400 a year. Assuming a preventative maintenance routine can prevent 100% of that expense*, that means 33USD per computer per month is not unreasonable. Finally assuming a goal of 50k a year, and 15 of that 33 is labor, that means 277 computers a year. With 40 hours a week that works out to about 30 mins a machine per month, probably mostly consisting of reviewing automatically generated logs and doing paperwork. It seems like scaling it down (without other models like break-fix) would be a tight rope walk, but because those are some big assumptions those numbers have a lot of wiggle room. I guess I mean it seems feasible but quite difficult, but hopefully someone here has actually done it and can give better answers.

*I know it's not 100%, but for the purpose of ballpark calculations I think it can serve well because there is a certain unquantifiable value to be assigned for not having it break in the first place and go through that hassle and facebook downtime.

 

[MrUnknown]

The only problem I see with doing this with residential is finding 200 people willing to pay that much per month to have this as a service.

Another tech on here, Mushin, offers a one-time payment for a year worth of service. I won't reveal his exact price for it here, but it is under $300 (this price is on his site) and offers unlimited support both phone and in-shop I believe. He says it works for him though.

Maybe I am closed minded, but I don't really see people willing to pay $30/month to maintain something they are looking at more and more as something to throw away and get a new one when it messes up. The one-time fixes seem to cost enough to them and it is getting harder to get people to pay that. I mean, you have upto $55/mo or $660/yr, that's a pretty good new computer each year. I can see $15 or $20/mo, but not much more than that. Again, I might be completely wrong and hope I am as it is a great way for a business to grow and to get that reoccuring revenue that our businesses seem to be more and more reliant on.

 

[callthatgirl]

My business offers buy 3 hours, get one free. We haven't been pushing it hard, but am slowly getting more sales. Brings down the basic hourly rate a bit, good deal for the clients and for us.