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sales:how_to_use_the_msp_margin_calculator [2018/02/25 01:18]
127.0.0.1 external edit
sales:how_to_use_the_msp_margin_calculator [2019/01/14 06:11] (current)
jaz909
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 ===== So Here's the Idea ===== ===== So Here's the Idea =====
  
-"I charge $120/user and I know what my costs are because each user gets Office and AV and..." +"I charge $120/user and I know what my costs are because each user gets Office and AV and" But do they? Each //user// gets Office and antispam, but each //PC// gets AV and MBAM, right?. What if you have more users than PCs? What if you have some full time user and some part time users, and there'​s some number of PCs that's not related to either? What if you have that one special user who needs everything included in their cost, but the rest of the peons just need the standard package? That's what this calculator is about. It's about breaking your per client cost down into units, and costing them out from there.
-But do they? Each //user// gets Office and antispam, but each //PC// gets AV and MBAM, right?. What if you have more users than PCs? What if you have some full time user and some part time users, and there'​s some number of PCs that's not related to either? What if you have that one special user who needs everything included in their cost, but the rest of the peons just need the standard package? That's what this calculator is about. It's about breaking your per client cost down into units, and costing them out from there.+
  
 Your cost is made of of multiples of certain “units”. Each unit is something that gets services/​software/​hardware/​etc. Your cost is made of of multiples of certain “units”. Each unit is something that gets services/​software/​hardware/​etc.
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   - Copy that sheet to your own Google Drive storage   - Copy that sheet to your own Google Drive storage
   - Take a look at the URL of your copy of that sheet. There'​s a key in the URL (see below) that is unique to that sheet. Copy it, we'll need it later.   - Take a look at the URL of your copy of that sheet. There'​s a key in the URL (see below) that is unique to that sheet. Copy it, we'll need it later.
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 {{:​sales:​pasted:​20161018-000904.png}} {{:​sales:​pasted:​20161018-000904.png}}
  
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 If you have a cost that is not monthly, there are two things you can do If you have a cost that is not monthly, there are two things you can do
-  ​- {{ :​sales:​pasted:​20161016-210418.png}}If it's a yearly cost like an annual UTM license, enter <​key>​=YourCost/​12</​key>​ into the cost column to get your monthly cost, or divide it by 12 yourself. If it's a 3 year UTM license cost bought up front, divide by 36. I'm sure you get it by now. Since this cost is annual and occurs every year, it's very simple to convert it to a monthly cost.+ 
 +  ​- {{  :​sales:​pasted:​20161016-210418.png}}If it's a yearly cost like an annual UTM license, enter <​key>​=YourCost/​12</​key>​ into the cost column to get your monthly cost, or divide it by 12 yourself. If it's a 3 year UTM license cost bought up front, divide by 36. I'm sure you get it by now. Since this cost is annual and occurs every year, it's very simple to convert it to a monthly cost.
   - If you're providing hardware like a server or UTM and you want to recoup that cost over the life of the term, then add "​HaaS"​ (quotes or no quotes, doesn'​t matter) to the Description of the item and enter your full one time cost and the sheet will automatically divide that one time cost into a monthly cost based on the length of the term   - If you're providing hardware like a server or UTM and you want to recoup that cost over the life of the term, then add "​HaaS"​ (quotes or no quotes, doesn'​t matter) to the Description of the item and enter your full one time cost and the sheet will automatically divide that one time cost into a monthly cost based on the length of the term
  
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 In order to make any changes to the sheet, you'll need to have your own copy. In order to make any changes to the sheet, you'll need to have your own copy.
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   - [[https://​docs.google.com/​spreadsheets/​d/​1s_VtfebMQERZeUz22DW2VdEMYXe3TGN6b-yH_zcB6Ng/​edit?​usp=sharing|Click here]] to open the master copy, then save a copy to your own Google Drive for editing   - [[https://​docs.google.com/​spreadsheets/​d/​1s_VtfebMQERZeUz22DW2VdEMYXe3TGN6b-yH_zcB6Ng/​edit?​usp=sharing|Click here]] to open the master copy, then save a copy to your own Google Drive for editing
   - In your copy of the sheet, go to the Costs tab and click on A2   - In your copy of the sheet, go to the Costs tab and click on A2
-  - There'​s a formula there to copy costs from the Master Costs sheet. Edit the IMPORTRANGE part of the formula to use the key you collected earlier from your Master Costs sheet\\ {{:​sales:​pasted:​20161018-172003.png}} +  - There'​s a formula there to copy costs from the Master Costs sheet. Edit the IMPORTRANGE part of the formula to use the key you collected earlier from your Master Costs sheet \\ {{:​sales:​pasted:​20161018-172003.png}} 
-  - Once you put the new key in, you'll get a #REF! error. Click on the cell and then click the blue "Allow access"​ button\\ {{:​sales:​pasted:​20161018-172258.png}}+  - Once you put the new key in, you'll get a #REF! error. Click on the cell and then click the blue "Allow access"​ button \\ {{:​sales:​pasted:​20161018-172258.png}}
  
 ==== Setting Up Your Units ==== ==== Setting Up Your Units ====
  
-Now that you have your costs, it's time to build your units. The sheet comes pre populated with most of the units you'll need. Feel free to rename and edit as you'd like. If you like the units as is, then let's start building them out. We're going to build your "​default stack",​ the one set of services/​software/​hardware that you'd like to include for most clients. This will be the base that you customize from.+Now that you have your costs, it's time to build out your units (tabs). The sheet comes pre populated with most of the units you'll need but feel free to rename and edit them as you'd like. If you like the units as is, then let's start building them out. We're going to build your "​default stack",​ the one set of services/​software/​hardware that you'd like to include for most clients. This will be the base that you customize from.
  
   - Use the tabs on the bottom of the sheet to move between units.   - Use the tabs on the bottom of the sheet to move between units.
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   - Select the item you want by clicking on it or using the arrow keys and pressing <​key>​Enter</​key>​   - Select the item you want by clicking on it or using the arrow keys and pressing <​key>​Enter</​key>​
   - The cost is automatically copied from the Cost tab. Cool, right?   - The cost is automatically copied from the Cost tab. Cool, right?
-  - If you want to quickly enable/​disable an item, click on the 1 on the left and toggle from 1 to 0 (1 = Enabled, 0 = Disabled)+  - If you want to quickly enable/​disable an item, click on the 1 on the left (in the A column, may appear as just a down arrow) ​and toggle from 1 to 0 (1 = Enabled, 0 = Disabled)
   - If you want to get rid of a line item, click on the Item name in B and clear it with <​key>​Backspace</​key>​ or <​key>​Delete</​key>​ and it will clear the price too   - If you want to get rid of a line item, click on the Item name in B and clear it with <​key>​Backspace</​key>​ or <​key>​Delete</​key>​ and it will clear the price too
   - You can see a running total of your line items in F1   - You can see a running total of your line items in F1
   - Do this for all the Units you want to calculate in your total cost   - Do this for all the Units you want to calculate in your total cost
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 {{:​sales:​pasted:​20161018-171858.png}} {{:​sales:​pasted:​20161018-171858.png}}
  
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 === Labor === === Labor ===
  
-In Column ​F, you can define how much time you expect to spend servicing each unit per month. This column is measured in Hours, so 0.10 mean 6 minutes per unit per month. If you're touching computers or users for much more than that a month, you'll want to edit this column to reflect that. (Or better yet, take a good look at how you're delivering your services and try to bring that labor cost down)+In Column ​G, you can define how much time you expect to spend servicing each unit per month. This column is measured in Hours, so 0.10 mean 6 minutes per unit per month. If you're touching computers or users for much more than that a month, you'll want to edit this column to reflect that. (Or better yet, take a good look at how you're delivering your services and try to bring that labor cost down)
  
-Define your Labor Cost in B18. This is what it //costs// you to provide an hour of labor for a client. This is **not** your hourly rate. If you have a 1099 contractor, put their hourly rate there. If you have a salaried employee, figure out what it costs you to pay them for an hour of work. You can base that on salary alone, salary + benefits, salary + office costs. It's up to you how much of your tech's cost you want to reflect in the client'​s cost vs the margin.+Define your Labor Cost in B23. This is what it //​costs// ​ you to provide an hour of labor for a client. This is **not** ​ your hourly rate. If you have a 1099 contractor, put their hourly rate there. If you have a salaried employee, figure out what it costs you to pay them for an hour of work. You can base that on salary alone, salary + benefits, salary + office costs. It's up to you how much of your tech's cost you want to reflect in the client'​s cost vs the margin.
  
 === Margin === === Margin ===
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 Remember that if you recoup your cost over a one year term, then next year you either remove the HaaS equipment from the cost, or just continue to collect and enjoy higher margins while socking away that money for hardware replacement,​ your call. Remember that if you recoup your cost over a one year term, then next year you either remove the HaaS equipment from the cost, or just continue to collect and enjoy higher margins while socking away that money for hardware replacement,​ your call.
  
-**Now you're done!** You have your Master Margin Calculator, and your Master Cost List. Great! Let's set up a new client.+**Now you're done!** ​ You have your Master Margin Calculator, and your Master Cost List. Great! Let's set up a new client.
  
 ===== Costing a Client ===== ===== Costing a Client =====
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 ==== Copy Your Sheet for Each New Client ==== ==== Copy Your Sheet for Each New Client ====
  
-{{ :​sales:​pasted:​20161016-194650.png}}At this point we have a master sheet that contains your costs and base units. When you want to calculate a cost for a new client, you should make a copy of the sheet, rename it for the client, and work on that one. That way, you have a record of what you included/​priced for the client on Day 1 and can refer to it in the future. ​+{{  :​sales:​pasted:​20161016-194650.png}}At this point we have a master sheet that contains your costs and base units. When you want to calculate a cost for a new client, you should make a copy of the sheet, rename it for the client, and work on that one. That way, you have a record of what you included/​priced for the client on Day 1 and can refer to it in the future.
  
 Working now on a copy of the sheet, we can start counting our units. On the "​Main"​ tab, simply count out how many of each unit type are included in your offering. A host with 2 VMs on it would be 1 Server and 2 VMs, for example. Working now on a copy of the sheet, we can start counting our units. On the "​Main"​ tab, simply count out how many of each unit type are included in your offering. A host with 2 VMs on it would be 1 Server and 2 VMs, for example.
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   * On Site, Remote   * On Site, Remote
   * Staff, Interns   * Staff, Interns
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 ==== Totals & Prices ==== ==== Totals & Prices ====
  
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   * Total Unit Cost: Column D, D16   * Total Unit Cost: Column D, D16
-    ​* This is the total cost of each unit that you're providing+      ​* This is the total cost of each unit that you're providing
   * Total Labor Hours: Column F, F16   * Total Labor Hours: Column F, F16
-    ​* This is the total hours per month that you're expecting to spend on this client. Go over those hours and you're cutting into your margins.+      ​* This is the total hours per month that you're expecting to spend on this client. Go over those hours and you're cutting into your margins.
   * Total Cost: J, J16   * Total Cost: J, J16
-    ​* Unit Cost + Labor Cost+      ​* Unit Cost + Labor Cost
   * Total Monthly Price: Column L, L16   * Total Monthly Price: Column L, L16
-    ​* This is the Cost from J with the Margin applied +      ​* This is the Cost from J with the Margin applied 
-    * The total in L16 is the one price for the whole office. All users, computers, etc plus their labor and margins are figured in here. This is what your check should say every month, regardless of how you divide and package it up for the client.+      * The total in L16 is the one price for the whole office. All users, computers, etc plus their labor and margins are figured in here. This is what your check should say every month, regardless of how you divide and package it up for the client.
  
 There are a few extra figures here as well There are a few extra figures here as well
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   * Daily, Weekly, Monthly, Yearly figures for Cost, Margin, and Price: B22:D25   * Daily, Weekly, Monthly, Yearly figures for Cost, Margin, and Price: B22:D25
   * Sample price breakdowns for "Price per User", "Price per User plus Servers",​ "Price per User plus Servers plus Site": B27-29   * Sample price breakdowns for "Price per User", "Price per User plus Servers",​ "Price per User plus Servers plus Site": B27-29
-    ​* If you want to give them one price per user and go up and down from there, go for it. If you want to spread it out with a separate charge for servers and sites, you can do that too. These are example breakdowns. Go nuts.+      ​* If you want to give them one price per user and go up and down from there, go for it. If you want to spread it out with a separate charge for servers and sites, you can do that too. These are example breakdowns. Go nuts.
   * Hourly Rates: B31-32   * Hourly Rates: B31-32
-    ​* This is a favorite of mine. Divided by either the IRS Average Work Hours per Month, or the total hours per year, you can compare this figure to what they might pay an entry level tech if you're trying to shut down the "We could just hire someone for that price" objection.+      ​* This is a favorite of mine. Divided by either the IRS Average Work Hours per Month, or the total hours per year, you can compare this figure to what they might pay an entry level tech if you're trying to shut down the "We could just hire someone for that price" objection.
  
 === Adjusting Prices === === Adjusting Prices ===
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 ===== Final Thoughts ===== ===== Final Thoughts =====
  
-I hope that this calculator helps you out in some way. If you have any questions about its use, please feel free to pop in to the #sales channel in the MSPs R Us Discord at [[http://​msp.zone]]+I hope that this calculator helps you out in some way. If you have any questions about its use, please feel free to pop in to the #sales channel in the MSPs R Us Discord at [[http://​msp.zone|http://​msp.zone]] 
 + 
  • Last modified: 2019/01/14 06:11
  • by jaz909