If you’re still billing most of your clients on a Time and Materials (T&M) basis, let’s break it to you gently: “A dollar of T&M revenue is worth about $0.50 of value.” That’s right—you’re working twice as hard for half the return. Compare that to managed services, where a dollar of revenue can be valued at 1.5 times. It’s clear which model is more valuable.
The Hidden Costs of T&M
Billing on a T&M basis means constant administrative headaches: invoicing nightmares, arguing with clients over hours billed, and unpredictable cash flow. On the other hand, MSPs with solid recurring revenue models click a button, send out invoices at the start of the month, and focus on growing their business. The difference is night and day.
Blame Microsoft and Make the Move
Here’s the good news: It’s easier than ever to have that conversion conversation with clients. Blame it on Microsoft and its new licensing models that require commitments. Tell clients it’s time to tie services together and move toward a more predictable, proactive relationship. The educated marketplace is ready, and the model is proven.