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4 business fundamentals to increase your MSP profits

Business fundamentals to increase your MSP profits blog title image

When managing a Software as a Service (SaaS) subscription company, you offer a subscription, the customer pays, and you enjoy an endless flow of cash -- seems easy, right?

Not exactly.

More and more companies are opting for cloud-based solutions. As your subscriptions grow, traditional methods of managing data are becoming obsolete. Cloud providers must ensure that their services meet users’ expectations while implementing the most efficient payment method for their services. This is where Zomentum Connect automated billing comes in.


The Problem with Selling SaaS

As the demand for SaaS applications increases, the challenges faced by cloud subscription companies also increase. Yes, your subscribers are happy -- but how effective is your business handling the massive influx of subscriptions?


The Importance of Gross Margin

Several factors contribute to a company’s gross margin, including pricing, return on investment (ROI), and infrastructure, just to name a few. The gross margin is computed by deducting the cost of goods sold (COGS) from your revenue.

Gross margin is essential for cloud providers because it indicates how scalable a business is. It is an incredibly valuable percentage that analysts and investors use to evaluate how efficiently your business drives profits. If you want to raise venture funding for your company, you’ll need a gross margin of around 80% to 90%, which means that your COGS should be only 10% to 20% of your total revenue.

4 Ways to Increase Your Gross Margin with SaaS Solutions

How can you make sure that you maintain a low COGS? For a cloud service provider, the best way is by optimizing their business through SaaS solutions. Here’s what it can do for you:

1.Reduced costs

Several factors contribute to a company’s gross margin, including pricing, return on investment (ROI), and infrastructure, just to name a few. The gross margin is computed by deducting the cost of goods sold (COGS) from your revenue.

Gross margin is essential for cloud providers because it indicates how scalable a business is. It is an incredibly valuable percentage that analysts and investors use to evaluate how efficiently your business drives profits. If you want to raise venture funding for your company, you’ll need a gross margin of around 80% to 90%, which means that your COGS should be only 10% to 20% of your total revenue.

2.Business insights

What gets measured gets managed! Ensure that you have quick access to important reports such as your monthly recurring revenue (MRR), customer lifetime value, revenue forecast, and much more. Business insights are essential to help you determine which areas of your cloud subscription business need more attention. In turn, your business can achieve its objectives faster and more efficiently.


Luckily we have access to tons of great tools to build better insights. The “Analyze” section in your Microsoft Partner Center CSP dashboard has excellent insights into your managed subscriptions. Autotask PSA offers you an easy way to peer into your operations, or you can get creative with a tool like Microsoft Power BI.

3.Dealing with problems

Nowadays, support questions come from everywhere: your customer will send you emails, call you on your mobile, or text via WhatsApp. It’s natural to lose track of all the details,

  • What needs to be fixed
  • Who is responsible
  • Who needs to be kept in the loop

Automating these processes is the key to staying on top of things. There are a lot of great tools to help you with this. Tools like Autotask PSA are for invoicing, procurement, ticketing, IT Glue to manage your documentation and procedures, and Datto RMM for remote management. Zomentum Connect can summarize all fluctuations from your Microsoft 365 and Google G suite subscriptions, even without connecting to your billing software.  

It may seem daunting to switch between these different tools, but now they are perfectly connected and integrated.  Be sure to find the ones that work best for you and your team.

4.Timely invoicing

Money is king. You want to make sure your customers pay you on time. We suggest negotiating payment upfront with your customers to ensure you have money in the bank.

More importantly, MSPs risk wasting the end of each month by manually creating invoices for your customers. Use an automated billing system to create timely invoices without wasting your team's precious time.

Do you know how much profit you’re missing from this administrative work? Use our profit calculator to find out!

Increase Your Gross Margin

There are a lot of things to consider running your MSP business. Zomentum Connect is on a mission to help MSPs like you maximize their profits. We can help you run your cloud subscription business with ease by automating your administrative processes. Our automated system is a crucial part of ensuring your company’s success.

With reduced costs on manpower, more time saved, accurate and timely billing, you can expect more significant gross margins in no time. The result? Greater profit.

Want to know more? Get in touch!