When it comes to pricing cloud services, I see MSPs taking all kinds of approaches. Some bundle Azure into their managed service offering and treat it as a flat cost. Others break it out line by line. The reality? No matter the model, many MSPs are flying blind when it comes to their true margins. That’s where trouble starts.
The cloud is flexible, but so are its costs. And without tight control, even the best-intentioned quotes can unravel, leaving you stuck in break-even—or worse—money-losing deals.
I’ve worked with countless partners navigating this landscape. Mastering accurate quoting, optimizing cloud resource sizing, and controlling hidden costs isn’t just a nice-to-have. It’s how you protect and grow your margin.
Let’s break down five key steps to ensuring you have the right margins to grow your business.
Step 1: Get the quote right or you’ll pay for it later
There’s no single formula for how MSPs price services today. Some bake Azure costs directly into their managed services contracts. Others bill usage separately. The structure isn’t the issue—it’s the lack of precision behind the numbers.
Too often, quotes are based on gut instinct, broad averages, or a client’s vague “we’ll grow later” wish list. And that opens the door to overprovisioning, underpricing, and surprise consumption spikes that destroy your margin.
Your quoting process needs to be both detailed and dynamic. Build in buffers. Include margin targets. Set clear expectations around usage tiers and support scope. And, most importantly, use tools that give you real-time pricing clarity. Nerdio, for example, lets you model different deployment scenarios before a single resource is provisioned. That way, you know exactly what it’s going to cost you.
Step 2: Right-size everything, always
Cloud waste is the silent killer of MSP profits. I see it all the time—partners provisioning too many virtual desktops “just in case,” running resources 24/7 when clients only work 9 to 5, or failing to revisit initial configurations long after client needs have shifted.
Right-sizing isn’t about cutting corners. It’s about aligning resources to actual usage and doing it in a way that’s repeatable and efficient.
Want a simple win? Start with auto-scaling. Use schedules to scale up Azure Virtual Desktop host pools during business hours and then scale them back down after hours. Leverage performance thresholds to spin up extra machines only when needed. Nerdio makes this painless, and it pays off fast.
Don’t stop there. Clean up orphaned resources. Apply Reserved Instances where usage is always on. Leverage Azure Hybrid Benefit to bring down licensing costs for Windows Server VMs. Every optimization here is margin in your pocket.
Step 3: Expose the hidden costs
It’s not just what you see on the bill that matters. Hidden costs, both hard and soft, can drain profitability faster than you realize.
Think about:
- Egress fees from unexpected data transfers.
- After-hours support that wasn’t scoped into the contract.
- Manual processes that eat up time and payroll.
One of the most common offenders? Manual image updates. If your techs are logging in at midnight to reimage AVD host pools, you’re burning money and morale. There’s no reason for that anymore. Automate it. With Nerdio, you can schedule after-hours reimaging with zero human touch.
If you’re still doing these things manually, your margin is already shrinking. Stop the bleed by automating the repeatable and reviewing your operational costs as often as your billing.
Step 4: Track the right KPIs
You can’t grow what you don’t measure. And yet, plenty of MSPs don’t have a process for tracking cloud profitability per client.
Here’s a simple place to start: Set expected billing thresholds for each customer. For example, you might expect Client A’s Microsoft consumption to run between $2,000 and $2,500 per month. If the bill comes in outside that range, dig in. Did usage change? Did the pricing shift? Did something break?
Rinse and repeat every month. That level of visibility keeps you in control of your margins and helps you catch issues before they spiral.
Also worth monitoring: average revenue per user, cost per desktop, and margin per account. These aren’t just numbers. They’re indicators of whether your pricing, operations, and service mix are actually working.
Step 5: Don’t wait for the renewal
If you’re already stuck in a low-margin (or no-margin) deal, don’t panic—but don’t sit still, either.
Start cutting costs today. Look for savings in licensing, infrastructure, and operations. Use all available tools, such as auto-scaling, reservations, and Azure Hybrid Benefit, to improve your economics.
Then, zoom out. When is the customer’s contract up for renewal? Use that window to rebalance the deal. Build in the margin you need. Reset expectations. And make sure the next agreement isn’t just sustainable, but profitable.
Too many MSPs keep kicking that can down the road. By the time they look up, they’ve spent years on an account that’s costing them more than it’s worth. Don’t let that be you.
Profitability is a process, not a hope
There’s no silver bullet here and no one-time fix. But there is a playbook: Quote accurately, right-size relentlessly, eliminate hidden costs, and monitor everything.
The MSPs who follow it aren’t just surviving in the cloud—they’re thriving! They know their margins. They protect them. And they grow their business with confidence.
Fortunately, pricing doesn’t have to be a guessing game. With Nerdio’s free Cost Estimator tool, you can quickly calculate the projected cost of each VDI environment, giving you the clarity you need to build accurate, profitable quotes.
