The cloud has further commoditized infrastructure. Managed Service Providers (MSPs) and AWS resellers now must determine how to add value to increase profitability. We typically see 7% margins achieved with AWS—but there is always potential to increase that number. MSPs and resellers should ask themselves how they can grow these margins—and what is their growth potential? Or, if margins can’t be increased, how can volume scale, or services be added? Understanding the most critical drivers of margins for MSPs and resellers will enable maximum returns and business growth.
Billing structure is at the core of the AWS reseller experience. Cost allocation and management is one of the biggest opportunities for resellers and end users to recognize cost savings, but it is also one of the most complicated pieces to manage.
As AWS resellers consolidate billing for multiple accounts within their management console, the task of passing appropriate costs along to end customers creates an interesting challenge. While grouping accounts ensures everyone pays the lowest rate possible, it also means individual accounts can end up with lower rates than they should—which is less than ideal for resellers and MSPs. “List Pricing” ensures that a single AWS account will pay for its fair share of AWS resources, and MSP and resellers maximize their margins.
Blended and unblended rates create a lot of complications in this area, as well.
Download the guide to MSP and Reseller billing with CloudCheckr
There are four key factors that can help you optimize your margins:
Pro Forma Cost
Knowing what your customer usage costs would have been if they weren’t incorporated within Consolidated Billing Families should affect how you bill them. List Cost visibility and control within CloudCheckr enables MSPs and resellers to factor in custom variables that ensure fair costs for customers, while allowing them to realize cost savings for account families.
Reserved Usage Unsharing
Reserved Instance unsharing can help resellers looking to manage and optimize Reserved Instances across payee accounts. This facilitates RI allocation to account families based on customers, to minimize the potential for unused or wasted instances. Properly allocating RIs within payee accounts ensures that benefits of discounted rates are achieved.
Pricing Tier Uncompression
Pricing for AWS services like S3, EC2 Data Transfer, CloudFront, etc. are tiered, decreasing in price as additional accounts are purchased. Although savings of scale (as additional accounts are added) are unlikely to cause large increases in margins for uncompressing service fees, business support cost uncompression is where MSPs and resellers can really see greater opportunity for growing margins. Because they must buy AWS business support for an entire consolidated billing family at cost for all accounts, uncompressing support charges can help resellers see the greatest amount of increase in margins. Custom Charges within CloudCheckr enable resellers to bill payees for the appropriate amount, while increasing margins.
Opportunistic RI Purchasing
Anticipating end customer needs can also facilitate opportunities for MSPs to buy RIs for their payee accounts in advance. Buying RIs at the payer level for a portion of anticipated account usage, while calculating pro forma cost for end users, can enable higher reseller margins. Historical usage data and purchase recommendations within CloudCheckr can help MSPs make more informed decisions about buying instances safely and efficiently.
Download the Buyer’s Guide to AWS Reserved Instances.
Grow Margins and Increase Profitability with CloudCheckr
CloudCheckr enables MSPs and resellers to pull in their Detailed Billing Report at the master account level to gain visibility and control across their environment, and end customers’ environments. Flexibility in billing through the Custom Cost tab ensures accurate and fair costs for end users, and enable increases in margins for MSPs. Comprehensive reporting within the CloudCheckr dashboard offers many perspectives on how exactly MSPs and resellers benefit from things like pro forma list price, RI unsharing, cost uncompression, and opportunistic RI purchasing. With reports like the Partner Monthly Summary, List Cost Analysis, and Savings Analysis, it is easy for MSPs to see and share results quickly.
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