How a managed service provider works
An MSP takes responsibility for some or all of a client's technology: devices, networks, security, backups, software licenses and the help desk. Instead of billing by the hour, it charges a fixed monthly fee, often per user or per device, under a service agreement that sets response times and what is covered.
Most MSPs serve small and midsize businesses that do not have a full IT team of their own. The client gets one number to call. The MSP gets predictable recurring revenue and a long relationship with each client.
Why MSPs matter to software vendors
Because an MSP already decides which tools its clients use, one MSP relationship can put your product in front of dozens of businesses. That makes MSPs a valuable channel partner for vendors selling security, backup, IT management, communication and productivity software.
MSPs usually want three things from a vendor: pricing that leaves room for their margin, the ability to manage many client accounts in one place, and protection for the deals they bring. That last point is why deal registration is standard in MSP programs. Some MSPs also want to sell your product under their own brand, which is where a white-label option comes in.
MSP partner models
- Resale. The MSP buys at a discount and bills the client, often bundling your product into its monthly fee.
- Referral. The MSP introduces the client, you bill them and the MSP earns a referral fee or a revenue share.
- Managed on your platform. The client buys from you, and the MSP administers the account and earns a fee for that work.
Example
Northgate IT is an MSP that looks after 60 accounting firms in Ohio. Fjord Analytics sells a document security product and signs Northgate as a reseller partner at a 25% discount off its $20 per user monthly list price.
Northgate adds the product to its standard security package for 12 clients with a combined 300 users. Fjord bills Northgate $15 per user, or $4,500 a month. Northgate bills its clients as part of its own monthly fee, keeps the margin and handles first-line support for every account.