As more and more businesses move to cloud-based infrastructures – with public cloud Infrastructure as a Service (IaaS) sector spending expected to reach $38 billion during 2016 – the need for cloud-based backup and disaster recovery services has likewise grown. As competition in the recovery and backup field becomes more intense, the ability to set competitive prices which cover costs and overhead becomes essential to success. The following five principles offer guidelines for effective pricing for backup and recovery services in the cloud.
- Recognize that backup and disaster recovery (BDR) is a service. As such, it represents an ongoing relationship between service provider and client. This ongoing relationship lends itself well to a recurring-fee payment model, which means an ongoing revenue stream rather than an initial infusion of revenue.
- Cost shouldn’t be the main point of decision for BDR customers. Instead, value should. A BDR service shouldn’t be seen as an increase in cost over base operating expenses, but rather as insurance against costly downtime if something should go wrong.
- A tiered or tailored plan is better than a one-size-fits-all solution. The need for BDR provisions varies by industry, business size, various applicable regulations, and a number of other factors. Plans should offer a fair degree of customization, and should be priced accordingly.
- Other services combine well with disaster management and cloud backup services. For example, business continuity planning is a natural companion to BDR services: both focus on fulfilling the same need, which is to ensure that a business can continue operating in the event of a disaster. Continuity planning is an added value for a BDR client, and can simplify their planning processes considerably. This convenience, additional security, and streamlined business-to-business relationship can command a higher rate than either of the services in isolation.
- Set your margins for profit. BDR services have a number of expenses associated with them, and those expenses aren’t limited to the technology involved. Businesses should consider staffing, marketing, training, consulting, and anything else which contributes to overhead. Then, margins should be set at at least 30 percent.
These five principles represent a good general guideline to approach pricing for BDR services. However, as with any service offering, awareness of niche and industry will have an effect on the pricing as well. Additional research is always beneficial.
To learn more about IaaS and your organization, contact eXemplify.