Level Platforms' Low Cost Entry Point Under Question

Upfront payments of between $2,500 and $7,000, quietly implemented in January, have started to detract from the entry-level pricing LSI has been promoting, said some solution providers.

Richard Rogers, senior consulting engineer at Swat Systems, a solution provider and MSP in Seattle, said he came onboard as an LPI partner last year, just before the vendor added the start up costs to the pricing model.

"We could have afforded the higher price [of the new pricing model], but a higher price probably would have made us look more at other options," said Rogers.

Swat is currently working with several smaller IT consulting firms in the Seattle area who are looking to resell Swat's LPI's MSP service, because LPI's entry-level pricing has become prohibitively expensive for them, said Rogers.

Ottawa-based LPI " which has been promoting a low-cost entry-level subscription price per customer, per site to remotely monitor customer networks " established new partner pricing in January that requires upfront payments of between $2,500 and $7,000 to get started, said Dan Wensley, vice president of partner development.

But LPI did not publicly announce the change to its pricing model, said Wensley. "We just kind of overlooked it, or the issue got buried," he said.

LPI's January changes require a new partner to pay $2,499 upfront for the vendor's Server Center management console and three one-year customer site licenses instead of paying $60 per month, per customer on a month-to-month basis.

But Wensley said the changes aren't causing sticker shock for partners. Most start out wanting more than one customer site license anyway and understood that there should be an added cost associated with proper training for the LPI product, he said.

"We were bringing on partners for just $60, but we found that wasn't in the best interest of the partners, and it wasn't in the best interest of LPI." he said. "It was such a low commitment that people were just coming on and then going off, and those who did that were just burning up resources."

LPI's ultra-low entry price has been a disruptive factor in the MSP industry. When it lowered its $60 entry price to $15 in February, LPI put aggressive price pressure on rivals such as N-able Technologies, Kaseya, Silverback Technologies, and Cittio. When LPI again lowered its entry price to $5 in May, an all-out price war in the MSP platform market was underway.

One solution provider who is now an MSP and LPI partner said he first contacted LPI about its service early this year and was not told about the upfront costs. When he was ready to sign a contact about three months ago, he was told the vendor had changed its pricing model. This MSP, who requested anonymity, was surprised to hear LPI had raised the cost of entry, but felt the value of the product still justified the higher upfront investment. He purchased a 10-seat license, which LPI lists on its price sheet at $4,999 for one year.

"I guess they have a business to run too," the MSP said.

After the first year, a partner's original batch of site licenses are renewable for a minimum term of one year, and can be paid for in monthly payments at LPI's standard rates, said Wensley. Additional one-year site licenses can be added at any time and paid for on a monthly basis.