How to Tell if You’re Billing the Right Hourly Rate—Do the Math!

September 29, 2014  
When it comes time to evolve from a break/fix (B/F) pricing model to a managed services (MS) recurring revenue model, make sure you have your ducks in a row. One of the first things you need to determine is if your hourly rate is the right one for your business.

So, let’s do some math. In this example, we are using one technician and 250 desktops. The variables of this calculation are the same, but values can vary widely by company.  Confirm your values with your accountant. The variables and calculation in this table are for a single billable technician who will play a key role in helping you move from B/F pricing to MS.

Knowing the hourly cost and sell rate for the technician means you can profitably price individual B/F or other services delivered by the resource.

Billing the right hourly rate is just one step in evolving your business model. You also want to determine costs and profits for a B/F and MS model, calculate price-per desktop for MS contracts, price additional services, and develop a price per user.  

Autotask’s new Smart IT Guide: 5 Steps to Pricing Managed Services whitepaper takes you through the steps of pricing services with helpful worksheets and best practices. It also provides guidance on how to transition a client from a B/F contract to a MS contract. IT service providers often struggle with pricing services to achieve desirable profit, but you don’t have to! With this comprehensive guide, authored by Autotask’s Len DiCostanzo, SVP, business development and community, you’ll have all the information you need to set a pricing strategy that works best for your business. 

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