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MSPs—Should You Charge for Quotes?

I often get complaints from MSPs who say they worked up an entire quote to redo an office or multi-location network, only to find the customer went off and purchased everything on their own. The next question invariably is, “Should I charge for my quotes?” My answer is always the same. No, you should not charge for your quotes. However, it is perfectly acceptable to charge for your designs. This small but vital distinction is the difference between being robbed of your knowledge and being reimbursed for it.

When I owned my MSP business, we produced quotes on a weekly basis. Sometimes it was a one-off project, other times it was a managed services contract. Most of the time, the quoting process included “designing” a solution for the customer. Something I learned from my break/fix days that stuck with me was a sign that hung in my very first client’s office. He is an attorney, and the sign was a quote by Abraham Lincoln. It read, “A lawyer’s time and advice are his stock in trade.”

Our knowledge is our value

knowledge.jpgThis advice holds true for any type of consultancy. As IT service providers—and a lot of us who were formerly VARs—we are used to selling “stuff” rather than our knowledge. The problem with that is that most of our real value is in providing the design of a solution rather than just the components of that solution.

So the question should really be, “How do we deliver a quote without revealing the design?” By being vague of course. This is your right; they asked you to quote them not provide a design. You invested your time and effort into the design in order to arrive at the quote. Your design has value and is a competitive advantage that you should not turn over to the customer unless they pay for it. A simple quote could look something like this:

  1. Network Router: $250
  2. Network Switches: 2 x $250 each
  3. Server w/ Windows 2016: $5,000
  4. Workstations: 25 x $650 each

This is an oversimplification, but you get the idea. You want to give them enough information to allow them to compare you against the competition, but not so much they can simply order it all online and attempt installing it themselves.

What do you do if they insist on seeing the details?

networkdigram.jpgStand your ground and offer to sell them the design. Explain that your design has value. You have to pay an architect before getting your house plans, and in some cases, you have to pay them even for a rough sketch from which they can give you a quote.

I typically estimated the time it took me to prepare the quote and based my fee on that. By the way, this does not have to be for an elaborate network refresh or large-scale project. I billed my non-managed clients for the time it took me to quote a single PC and then either sold the PC at cost or let them order it themselves. This clearly defined my value as their IT provider much better than making the same amount of money in the markup. That said, if I had been more into selling hardware, I could have purchased at discounts unavailable to them and made money on both, but that was not my business model.

The bottom line is your knowledge and advice are your stock and trade. Do not give them away for free.

Additional reading:

  1. As an MSP, How Do You Charge for Travel?
  2. 10 Things to Consider When Writing MSP Contracts
  3. Six steps to onboarding customers properly
  4. MSPs: How to Build a Referral Program

Eric Anthony is director of customer experience at SolarWinds MSP. Before joining SolarWinds, Eric ran his own managed service provider business for over six years.

You can follow Eric on Twitter at @EricAnthonyMSP

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