Tips for Dealing with DaaS Vendor Price Changes

When Desktop as a Service (DaaS) vendors raise prices, MSPs must reevaluate offerings, notify their customers and keep business on track.

DaaS

Desktop as a Service (DaaS) adoption has increased, and according to Research Nester, factors like heightened demand for cloud computing services and governmental interest in improving IT infrastructure will spur continued growth in the market.

Now that many businesses have tried and proven that remote work is a viable alternative to requiring employees to report to the office, giving workers the ability to log in from anywhere on any device makes DaaS an attractive solution.

Your DaaS offering also enables your clients to shift the burden of managing virtual desktops, maintaining them, and backing them up to your managed services provider (MSP) business. Additionally, DaaS also makes financial sense. It can greatly reduce the amount of on-premises infrastructure required, as well as the cost of purchasing, maintaining, and servicing it.

Technology advancements from DaaS vendors have given you the ability to offer broader capabilities more cost-effectively. However, in some cases, costs are going up. For example, in 2023, Microsoft raised prices on all its products and services by 9 percent. Additionally, DaaS vendors sometimes alter their products, which may necessitate shifting users from basic service to a higher tier to get the features they need.

Be Transparent with Your Customers

In a period of inflation and economic uncertainty, dealing with price increases could be detrimental to otherwise strong customer relationships. Members of The ASCII Group advise sharing information and communicating upcoming changes with your customers.
Dave Winkel, President of Ellegent Systems, Inc., says, “We send a letter to all clients to explain what’s happening and notify them that we’ll contact them personally.” He adds his clients have accepted Microsoft pricing changes, but managing accounts has become more complicated for his business.

Erik Sheldon, CEO of Sheldon IT Solutions, LLC, says, “Because all of my clients can go up and down at a moment’s notice, I’ve decided just to tell them it’s an increase across the board and make it easier on them and myself.  We’re still going month to month on everything moving forward.”

He adds, “It seems it’s just the cost of doing business when you’re using a solution like M365 that you pretty much NEED once you get deep into using all that they provide.  It’s a very sticky product once you get to using it.”

Stay Focused on the Long Term

A price increase is a reminder to revisit policies that impact your customer relationships and your business.

Sheldon says, for now, price increases aren’t making an impact, but if they keep increasing, they could. “Depending on how savvy the customer is at doing their own work in these situations, it may affect me, but I don’t charge any sort of management fee that some MSPs charge for O365/M365 work besides an initial setup fee, so maybe that’s what will keep my customers with me.”

Winkel advises taking a look at the terms of your agreement with the vendor, particularly whether you’ll be obligated to pay a customer’s contract if they decide to no longer use a service when prices increase.

It’s also smart to take this opportunity to revisit bundled services you built to maximize margin to make sure a price increase in one or more products or services still enables you to build adequate income without hurting your competitiveness.

Furthermore, changing prices also underscores the fact that selling on pricing alone is always risky. Build comprehensive offerings that provide your clients with DaaS with added value that your business can uniquely provide.

Price increases from your DaaS vendors or SaaS vendors that provide solutions for your clients’ software stacks are a certainty, if not now, then at some point in the future. Be prepared to address them with transparency and practicality and keep delivering DaaS solutions backed by the best possible service at optimal prices.

About The ASCII Group, Inc.

The ASCII Group is the premier community of North American MSPs, MSSPs, VARs and solution providers. The group has over 1,300 members throughout the U.S. and Canada, and membership encompasses everyone from credentialed MSPs serving the SMB community to multi-location solution providers with a national reach. Founded in 1984, ASCII provides services to members, including leveraged purchasing programs, education and training, marketing assistance, extensive peer interaction, and more.  ASCII works with a vibrant ecosystem of major technology vendors that complement the ASCII community and support the mission of helping MSPs and VARs grow their businesses. For more information, please visit www.ascii.com.