Let’s talk about a slightly touchy subject: onboarding fees. If you’re running an MSP and don’t know what I’m talking about, brace yourself—you’re probably leaving money on the table. Also known as the “13th month,” the onboarding fee is that one-time charge you ask new clients to pay to help cover all the effort that goes into getting their systems in shape for your team to manage.
Sounds simple, right? Well, not quite. There are pros and cons, and customers don’t always love seeing it on the bill. But before you start second-guessing whether you should be charging this fee, let’s dive into what it really is, why it’s often worth charging, and when it might make sense to waive or negotiate it.
What Exactly is an Onboarding Fee, Anyway?
Imagine this: a new client signs with your MSP, and now your team is about to spend the next few weeks playing detective. They’ll be untangling a mess of undocumented configurations, finding out which users have admin access but shouldn’t, and discovering that “backup” the client swore they had? Yeah, it doesn’t exist. Fun times, right?
That’s where the onboarding fee comes in. It’s like charging someone for the nightmare of moving into a new house and realizing the last owner “forgot” to tell you that the plumbing makes a mysterious gurgling sound at 3 AM. Basically, it covers all the upfront labor your team will endure as they take on the client’s mess, and yes, it’s as necessary as it sounds.
Why You Should Absolutely Charge It
First and foremost, onboarding a client takes time, energy, and more patience than it should. You’ve got documentation to create, systems to migrate, and, let’s face it, you’re also probably going to discover some hidden surprises that’ll take extra hours to sort out. All of this costs money, which is why onboarding fees exist in the first place.
These fees also smooth out your cash flow. Instead of spending weeks on non-billable work, you’re getting compensated for the grind right off the bat. The client gets the VIP treatment from day one, and you’re not footing the bill for it. Sounds fair, right?
Besides, the onboarding fee can do something magical: it can pay for the commission that the sales exec earned by bringing in the deal. Imagine their motivation when they know they’ll see that extra bit of cash from the hard work they put in. Happy salespeople, happy team.
Use It as a Negotiation Tool
Here’s where things get fun: you can use the onboarding fee as a sneaky but effective bargaining chip. Let’s say a client is pushing back on your rates. Instead of lowering your monthly fee and eating into your profit long-term, offer to waive part (or all) of the onboarding fee.
People love to feel like they’re getting a deal, even if it’s just about moving numbers around. You can even show the onboarding fee on your proposal but red-line it, making it clear the client is getting a “discount.” They feel like they’ve won, but in reality, you’re preserving your long-term pricing—and everyone walks away happy. It’s like offering free dessert at a restaurant when you know the client’s still paying for the entree.
But Wait, There Are Downsides…
Of course, not everything is rainbows and onboarding fees. Some clients might take one look at the extra charge and immediately start hyperventilating. They may think, “I’m already paying for your service—why should I pay more just to get started?” And I get it, nobody likes hidden fees.
You don’t want to come off as expensive before the client even gets a taste of what you can do. It’s like paying for dinner before you’ve even seen the menu. This is where it’s crucial to educate the client about the value of what they’re paying for—those systems aren’t going to onboard themselves!
How to Make the Onboarding Fee Work for You
So, what’s the bottom line? Onboarding fees can be a win-win when used correctly. They cover the upfront workload, fund the sales commission, and give you a powerful tool for negotiations. But, like any tool, they need to be handled with care.
Be upfront with clients. Let them know what the fee is for and why it’s there. Break down the value they’re getting in return, so it doesn’t feel like an arbitrary charge. When used smartly, the onboarding fee becomes something that makes both your team and your client happier in the long run.
