I LOVE MRR! Who doesn’t? Monthly Recurring Revenue that is predictable is AWESOME!
When I ran my MSP, anything I could package into a monthly recurring contract I would. Even if that meant staffing. There is different schools of thought on whether staffing should be considered part of MRR. But given that, our approach was to give our clients an all inclusive monthly fixed fee price, staffing was just another add on service. So in my book, if it’s monthly recurring revenue then it counts as MRR.
During my time in the HTG Peer Group, I got a lot of pushback about our MRR contracts because the numbers tended to be above the normal average. At the time of our sale, our Average MRR contract was approximately $7,450 when the industry average is probably somewhere around $1,500 – $3,000. The main driver for our large average was that we included onsite staffing in a lot of our agreements which drove up the average.
Staffing is a BEAUTIFUL model done right. Like any service offering, it has to be carefully monitored and managed however, it has tremendous upside. By putting someone onsite full time or even part time, you get a set of eyes keeping an eye on the network and your customers. Even though we have the benefit of technology, its always great to look your customers in the eye and connect with them.
The other benefit is that you don’t have to pay for the office space for that resource to work. And assuming the clients are somewhat spread out you can have resources spread out that in the event you have to react to a major emergency that you need to respond to, you can get there quicker.
Just make sure if you do explore this offering that you set the right expectations. Check out a previous post where I talk about a best practice for staffing around swapping onsite resources.