Managed Services Masterclass: Defining Service Tiers and Packages

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The key insight from Sokolinsky’s presentation is that physical security integrators operate with distinct advantages over traditional IT managed service providers, yet many aren’t capitalizing on these strengths through systematic service offerings. This aligns with broader industry research on service tier pricing models showing that tiered approaches have become the standard for SaaS providers and can be equally effective for security integrators transitioning to managed services.

Here’s the thing that got everyone’s attention: you’re not competing with traditional IT managed service providers on a level playing field. You’re actually playing a completely different game and winning it without even realizing it. And the numbers back this up. According to the Security Business Magazine State of the Industry Report 2023, about 30% of the security industry has less than half of its revenue in recurring contracts, while only 28% receive over 75% of their revenue from recurring sources. That massive gap in the middle represents your opportunity.

The Numbers Don’t Lie

What Happens When You Get This Right

• 30% boost in subscription revenue almost immediately
• 50% of customers who start with your basic tier will upgrade within their first year

Think about what that means for your cash flow. Instead of chasing the next big installation project and wondering where your revenue will come from in Q3, you’ve got predictable monthly income rolling in. You can actually plan vacations without panicking about whether you’ll make payroll while you’re gone.

The beauty of tiered services goes way beyond just making more money, though. You’re essentially creating different revenue streams for different types of customers. Your small local retail client gets exactly what they need without paying for enterprise-level features they’ll never use. Meanwhile, that growing regional chain can access the premium monitoring and response services that keep their operations running smoothly.

This approach mirrors what’s been working brilliantly in the software world. Tiered pricing is now the most common approach to Software as a Service (SaaS), with an average of 3.5 tiers offered by many providers in 2025. The beauty is that this same model translates perfectly to physical security managed services.

Your Secret Weapon: Operational Intelligence

Traditional IT managed service providers are stuck in the infrastructure lane. They can monitor your switches, patch your servers, and manage your firewalls all day long. But they have absolutely no clue what’s happening on the operational side of your customer’s business.

You do. You understand when that door has been propped open for too long. You know when an LPR hit means someone important just pulled into the parking lot. You can set up video analytics to detect if someone’s in an area they shouldn’t be at 2 AM on a Sunday.

This operational intelligence is pure gold, and most integrators are just giving it away as part of their installation package. Instead, you should be packaging it into premium service tiers that no traditional MSP can touch.

Real-world example: Your customer gets a notification the second someone climbs their fence after hours, complete with a clip automatically pulled and ready for review. Try getting that from the local IT guy who installs printers for a living.

The Three-Pillar Service Foundation

Kirill broke down the service categories into three distinct areas, and this framework is brilliant because it covers everything your customers actually need, not just what traditional MSPs think they need.

1. Infrastructure Monitoring (Your Bread and Butter)

• Remote device health monitoring (switches, routers, firewalls, cameras)
• Firmware and software status alerts
• Syslog monitoring for network devices
• Configuration backup for infrastructure devices
• SOC services and monthly penetration testing
• Storage monitoring for VMS data

2. Desktop/Server/Cloud Monitoring (The Bridge)

• Endpoint monitoring with agent deployment
• VMS health monitoring capabilities
• Windows and Linux server monitoring
• Patch management and OS health checks
• Certificate updates and licensing maintenance
• Access monitoring (SSO/MFA)
• Container and virtual machine monitoring

3. Operational Security Monitoring (Your Differentiator)

• LPR alert notifications and daily hit reports
• Real-time video analytics alerts
• Forensic search and clip retrieval services
• Object classification with custom playbooks
• Camera image health monitoring (blurry, obstructed detection)

The Three-Tier Sweet Spot

The most successful MSPs consistently land on a three-tier structure because it balances choice with simplicity. Kirill’s framework aligns perfectly with industry best practices: Basic, Pro, and Premium tiers that each serve distinct customer segments with clear value propositions.

As detailed in comprehensive service tier pricing research, this three-tier approach has proven most effective across various service industries, particularly when each tier addresses distinct customer segments with clear value differentiation.

Basic Tier

• Service Coverage: Essential infrastructure monitoring (cameras, servers, basic storage), firmware status alerts, basic configuration backups
• Response Times: Next-business-day remote response, on-site visits available at standard hourly rate
• Pricing Model: Fixed fee per device/month
• Target Margins: 40-50%

Ideal For: Price-sensitive customers who want professional monitoring without breaking the bank

Pro Tier

• Service Coverage: All Basic features plus license plate recognition (LPR), object detection analytics, monthly scheduled on-site visits
• Response Times: 4-hour remote response, monthly scheduled maintenance visits
• Pricing Model: Volume discounts as camera counts rise, monthly plan fees
• Target Margins: 50-60%

Ideal For: Mid-sized clients who want valuable analytics features and predictable system maintenance

Premium Tier

• Service Coverage: All Pro features plus facial recognition, AI anomaly detection, 24/7 real-time monitoring, cloud backups, SOC services, forensic search capabilities
• Response Times: 24/7 real-time monitoring, priority same-day on-site response
• Pricing Model: Bundled pricing tiers with ad-hoc work allowances included
• Target Margins: 60-70%

Ideal For: Enterprise-level partnerships where you become a strategic security partner

Smart Pricing Strategies

The pricing strategy Kirill outlined makes perfect sense when you think about it. You want margins between 40-50% on basic services, 50-60% on professional tier, and 60-70% on premium offerings. The higher tiers have better margins because you’re leveraging the same tools and infrastructure to deliver more sophisticated services.

Industry Benchmarks

• Typical camera monitoring: $5-$10 per camera per month
• SOC services: $250/hour as standalone offering
• Margin progression: 40-50% Basic → 50-60% Pro → 60-70% Premium

Pricing Model Options

• Device-Based Pricing: Perfect for infrastructure monitoring (cameras, servers, access points)
• User-Based Pricing: Ideal when offering management portals or per-seat software licensing
• Per-Analytic Pricing: Charge separately for specialized monitoring like facial recognition or LPR
• Hybrid Approach (Most Popular): Combine device pricing for hardware with user pricing for software access

Many successful MSPs blend approaches: charging per device for infrastructure while using user-based pricing for management portal access. You could also monitor per analytic as another pricing model.

Customer Segmentation: Two Winning Approaches

There are two ways to think about your customer tiers, and both have merit depending on your business model.

Option 1: Size-Based Tiers

• Small Business: Affordability + compliance focus (local retail shop)
• Mid-Market: Uptime + predictable budgets (regional restaurant chain)
• Enterprise: Mission-critical reliability + strategic partnership (corporate headquarters)

Option 2: Vertical-Based Tiers

Sometimes a small customer needs big-company services:

• Small community bank: Enterprise-level monitoring due to regulatory requirements
• Boutique medical practice: Premium tier for HIPAA compliance
• Local casino: Advanced analytics regardless of company size

Key insight: Don’t force every customer into a size-based box. Sometimes compliance trumps company size, and you can offer enterprise-class services to smaller organizations in high-compliance verticals.

The Land and Expand Goldmine

Service tiers create natural expansion opportunities with existing customers. When you start someone on a basic monitoring package, you’re not just providing a service, you’re building a relationship and demonstrating value.

As their business grows, as they add locations, as they face new security challenges, they’re going to look to you for solutions. Instead of having to sell them on why they need your services, you’re having conversations about which tier makes sense for their evolving needs.

This creates predictable revenue growth that you can actually forecast. Instead of wondering if you’ll hit your numbers this year, you can look at your customer base and see exactly who’s likely to upgrade, when they’ll probably need additional services, and how much incremental revenue that represents.

The 90-Day Implementation Roadmap

The implementation timeline Kirill suggested is refreshingly realistic. You’re not rebuilding your entire business model overnight, you’re systematically rolling out service tiers over 1-3 months.

Month 1: Foundation

• Market analysis and understanding current customer needs
• Select 2-3 trusted customers for pilot program
• Define initial tier structure
• Validate pricing with market research

Month 2: Build and Test

• Train staff on service level delivery
• Develop playbooks for each tier
• Set up billing and monitoring tools
• Refine offerings based on pilot feedback

Month 3: Launch and Scale

• Create marketing materials
• Begin migrating existing customers
• Start promoting to new prospects
• Establish regular review cycles

Essential Tools You’ll Need

• Billing platforms that handle tiered pricing (Chargebee, custom MSP solutions)
• Remote monitoring tools with automated alerting
• Quote-to-Cash systems for smooth customer onboarding

The staff training component is crucial because your technicians need to understand how to deliver consistent service levels across different tiers. Your basic tier customers shouldn’t get enterprise-level response times just because your tech happens to be having a good day, and your premium customers shouldn’t wait four hours for a response because nobody communicated the service level expectations.

Avoid These Common Pitfalls

Research on effective service tier implementation identifies several key mistakes that can undermine your pricing strategy:

1. Overcomplicating Your Structure

The Problem: Too many tiers with laundry lists of features
The Fix: Start with 3 tiers max, highlight only essential differences

2. Underestimating Support Costs

The Problem: Premium customers expect instant response but pricing doesn’t cover true costs
The Fix: Calculate average resolution time × labor costs + overhead + equipment

3. Poor Communication

The Problem: Listing features like “Data encryption” without explaining benefits
The Fix: Show outcomes: “LPR coverage can decrease theft incidents by 30%”

4. Ignoring Usage Patterns

The Problem: Forcing device pricing when customers think in user terms
The Fix: Track how customers actually measure value and adapt accordingly

5. Technology Evolution Blindness

The Problem: Setting rigid tiers that can’t adapt to new capabilities
The Fix: Schedule regular reviews every six months, especially early in your MSP model

6. Failing to Communicate Plan Benefits

The Problem: Technical jargon without clear business value
The Fix: Spell out real outcomes with data points and specific benefits

Making the Business Case

Why This Matters Now

Traditional project revenue = unpredictable feast or famine cycles
Tiered service revenue = predictable monthly income you can forecast

Break-fix reactive model = customer calls when something’s broken
Proactive monitoring model = you fix issues before customers know they exist

Vendor relationship = competing on price for every project
Strategic partnership = trusted advisor with ongoing value delivery

The Competitive Reality Check

Every physical security integrator can install cameras and access control systems. Not every integrator can provide comprehensive managed services that blend IT infrastructure management with operational security intelligence.

Your Competitive Moat:

• Traditional MSPs can’t do operational security monitoring
• Pure-play integrators don’t understand ongoing service delivery
• You can do both, creating differentiated value

The question isn’t whether you should be thinking about service tiers. It’s whether you want to be the integrator who figures this out first in your market, or the one scrambling to catch up in two years when everyone else is already generating predictable recurring revenue from services you’re still giving away for free.

By moving from reactive break-fix work to a proactive service model, you’ll identify camera outages, software glitches, and network anomalies before your clients even know there’s a problem. That’s the kind of value that turns vendors into trusted partners and one-time customers into long-term relationships.

Key Takeaways

✅ 30% revenue boost is achievable with proper tier structure
✅ 50% of basic customers will upgrade as they grow
✅ Three tiers (Basic/Pro/Premium) hit the sweet spot for most MSPs
✅ Operational intelligence is your secret weapon against traditional IT MSPs
✅ 90 days is a realistic timeline to get your first tiers operational
✅ Regular refinement keeps you ahead of technology changes
✅ Predictable revenue replaces feast-or-famine project cycles
✅ Customer relationships deepen through proactive service delivery

This was just part one of a five-part series. The next session promises to dive deeper into advanced implementation strategies for turning your integration business into a recurring revenue powerhouse.