The MSPs’ Guide to Breaking Away from Break-Fix

By Tim Conkle,  CEO of The 20

Break-fix is a dirty word in IT, especially for established MSPs. It’s also the model most MSPs grew up with. Break-fix pulls more money out of the technical process for better and for worse, but it also stifles growth at scale. While your business may have moved away from break-fix proper, what services do you offer which still qualify as break-fix in ideology?

In the beginning, a transactional model might be the best as you focus on ironing out what your business does and building a reputation. But, as you grow, you need to move away from transactional sales to focus on building contracts. A contract means that you are putting your faith in a continued involvement and making costs more predictable for both you and your client. It’s also a test of faith for your client on whether you have educated them enough to trust what you’re doing for them.

Let’s go over what makes up a break-fix mindset, why it is a net negative in most situations, why there is nuance to needing some break-fix options, how to reframe your SLA (Service Level Agreements), how to get out of break-fix, and how to scale your business.

Breaking Down Break-Fix

The break-fix model is most simply: If it breaks, we fix it. This can be computers, networking gear, software, etc. You’re willing to charge a rate per unit of time in order to perform work to rectify some specific issue.

This principle can be abstracted further with project rates and work which isn’t rolled into a service offering. Even large MSPs which normally only work on contracts will still have some level of break-fix options. This can be do to the fact the “service” isn’t economically viable, or even as an anchor to make the service feel more valuable (e.g. the anchor for break-fix is near the cost of the service, one is predictable, the other isn’t).

Project work outside of the scope of your SLA contract can be an example of a break-fix principle in your process. You’re trading time to fix a problem. Sometimes, it makes sense, for instance, most people don’t buy flood insurance if they live on a high hill; they just eat the cost. The water doesn’t reach them except once in a lifetime if then.

Sometimes, break-fix ideas bleed into areas we aren’t familiar. Some MSPs have rates for tangential services they aren’t as confident in. It’s hard to compute a fair price if you don’t what the end results look like or what the average costs or. It can be just as true if you don’t know what the range looks like versus the average.

Why Break-Fix Breaks

As you onboard a contract client and shore up their issues, you put the bulk of the work in the beginning and ideally make their technology just work for them while collecting a fee to maintain it. When you do break-fix, you just fix the issues from before and then they don’t see why they need a technical service provider until the problems mount up again. Computers are new in business even though they’ve been here for a full generation.

A small MSP will break-fix a client into where a competing MSP can win them over. They did the painful onboarding day and night so that someone else could get money per month to do virtually nothing. Automation and proactive alerting make a difference between a client costing you a few hours and days or weeks of downtime. When you do things right, a contract means an expensive onboarding then a huge reduction in cost and pure profit.

Small MSPs can’t afford it, but as you scale, you can’t afford not to. A contract means that you throw all of your resources or a sizable amount into the onboarding, and then you just collect the proceeds to make things keep working. Everyone is happy because most businesses plan around a fixed cost for support or similar over a yearly period.

An amortized $10k is less expensive to an established business than a $5k surprise. The cost in risk reduction is worth more than the extra cost per amortized month for certain industries. Risk adverse businesses are usually resilient to most changes and are typically more dependable for invoices.

You can support a start-up, or you can support a static company. One may not grow, but your team might which means more of the same type of static companies is more profit for less cooperative effort. As you stabilize, so does your expectation of the clients you support. In the B2B space, the business type you support becomes the foundation of your existence.

Why Break/Fix Works

Break-fix wouldn’t be the common model if it didn’t work sometimes. It’s not ideal at scale, but it works with certain services and tasks. When you’re just getting started, it’s an easy way to bring in income with limited resources. They need a fix and you’re there for a weekend.

As your team builds up, break-fix becomes less effective. You have far more resources and the spikes in utilization become rounded out with averages for spikes in labor. As your MSP thrives, the rough weekends largely disappear and the stress becomes constant but predictable. As you scale, your problems become more logistical rather than existential.

That said, there are still plenty of use cases where the logistics or pricing just doesn’t make sense for a service proper. You may be supporting something which is extremely unpredictable and extremely uncommon to the point customers are upset paying for it. Other offerings just don’t work as a service which a business can justify unless it’s one of their core competencies.

The break-fix methodology should be removed from your core offerings, but it’s fine to have some of these offerings as a way to offload certain tasks. If you do cabling, it really wouldn’t make sense as an independent service since 90% or more of what will ever be done at most businesses is done in the first month (most places don’t go back and upgrade until they absolutely have to, which can be literally decades). The appeal of a service is to reduce the perceived cost, but who would subscribe to a service they’ll never use more than once unless they have to?

Reframing SLAs

We mentioned cabling and similar, but most MSPs will round these tasks into part of the onboarding service (within reason). You may not be able to sell something as a separate service, but you can offer a break-fix solution and a tier which rounds in some amount into your main service. Not everyone will bite, but the ones who do are now paying more for something that already happened and the promise to keep it maintained.

Your SLA (Service Level Agreement) with a client impacts what you are expected to do and what is expected of you. While these two concepts should be the same, they can end up as not depending on how your client understands technology. The more things which are out of the scope of a contract, the more likely a client is to feel they’re being nickel and dimed out of money.

How can you package things into a service so they only need to come up once during the sales process? Sell them once and offer ways to buy up as they see just how expensive ad-hoc really is. Done right, you’re rewarding your business and your client for you doing things right the first time. They get everything done the right way from day one and a lot more work for the cost of the first few months, and you get paid to make sure new changes don’t break anything once you set everything up.

With this move comes the need to level up how you handle your business process so that it can scale with what you sell. B2B sales cost more time and effort to get going, but end up with greater potential. Save yourself the headache of a client being angry they have to pay more and just charge from the get-go. As long as both parties understand and agree, it’s a net win for everyone.

Moving Past Break/Fix

Some clients aren’t going to want to sign new contracts or change how they do business. If you’ve been doing break-fix for a while, these clients only pop up when they need new machines onboarded or in the event of emergencies. The expected income for these clients plummets drastically. On the flip side, there is also an opportunity in these scenarios.

Break-fix costs more as you scale. You need to have the resources and logistics to properly handle the ebbs and flows in the labor and it can even end up costing money in certain periods. You may even be contractually unable to take new clients because you’re stuck handling a one-off problem for a break-fix client that is eating all of your bandwidth. If you don’t have an explicit contract for the price, price yourself out. This either gets you out of doing the less predictable work (freeing you up for more favorable contracts), gets someone throwing money at the problem making it worth the extra hassle, or it can even be a price anchor for contract upsells.

Don’t violate your contract or what you’re expected to do, but do make it clear you prefer service based pricing. It works out better for both parties and can even be worth giving previous clients a discount to get them moved over.

Make your new contracts focus on service delivery. Market based on the fact the clients don’t need to worry. Highlight the mundane aspects and turn them into points of safety and security. This type of marketing is harder, but the right drip campaign and the right tactics mean it just takes time and effort to win the right contracts. Let your customer rest well knowing you’ll be there to help them and that you’ll continue to get an income that justifies putting all of the hard work forward from the first onboarding.

Scaling Past Break-Fix

Once you start moving away from break-fix, you’ll probably feel some pressure in the beginning with onboardings which quickly goes away as the site is squared away. In the beginning, you need to control the rate you’re onboarding new clients to make sure each gets the right experience. It pays dividends to measure twice and cut once with new onboardings so the client is happy and you barely need to do anything to continue supporting them from an infrastructure level.

Break-fix is too unpredictable to properly scale. As you grow, it becomes untenable as you either need to keep onboarding or need to hope that clients continue to have work. Either pattern is untenable versus income which is no longer tied to the raw hours you need to put out.

What are you doing to grow and scale your business from the model it started with? How are you removing break-fix patterns or leveraging the ones which can’t be changed? There are going to be things you do which clients need which don’t make sense as standalone services, but you need to know what they are and why it’s true. As your sales go from transactional exchanges of time and expertise for money into a service, the value and security of a contract goes up for both you and your prospective client.

 

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