Insights — Channel Creation & New Revenue Streams — 3 min read
How to Create a Managed Service: The Step-by-Step Guide
A managed service is not just a recurring invoice. It is a commitment to an outcome. Transitioning requires a shift from 'doing the work' to 'owning the result'.
In short
To create a managed service, you must first define a specific, recurring outcome that your customers value (e.g., 'compliant payroll', 'secure network', or 'consistent lead flow'). Then, standardise the process for delivering that outcome, removing bespoke elements that can't be scaled. Price it based on the value of the outcome, not the hours it takes to deliver, and use commercial automation to handle the recurring billing and reporting.
Moving from selling one-off projects to offering a managed service is the most effective way for a service business to scale. But many businesses fail because they simply take their existing hourly-based work and try to charge for it monthly. This leads to scope creep, customer frustration, and eroded margins.
A true managed service is a distinct product. It has a defined scope, a fixed price, and a clear 'Service Level Agreement' (SLA) that tells the customer exactly what they are getting — and what they are not. It is built to be repeatable, allowing the provider to use systems and automation to deliver high value with lower manual effort.
Step 1: Identify the Repeatable Outcome
Start by looking at your most successful projects. What are the common elements that every customer needs? A managed service should focus on the vast majority of the work that is common to all clients, rather than the portion that is highly bespoke. If you can't describe the outcome in a single sentence, it's not a managed service yet.
Step 2: Define the Boundaries (SLA)
The biggest killer of managed services is 'scope creep' — where the customer assumes that because they pay a monthly fee, you will do anything they ask. Your contract must be crystal clear about the boundaries. What is included? What is excluded? What are the response times? These boundaries are what allow you to protect your margins.
Step 3: Standardise and Automate
A managed service is only profitable if it is efficient. This means moving away from 'manual everything'. Look for ways to use AI and automation to handle the heavy lifting. Can you automate the data collection? Can you use AI to draft the monthly reports? Can you use a client portal to handle simple requests? Every hour you remove from the delivery process without reducing the value is pure profit.
Step 4: Price for Value, Not Time
If you price your managed service by adding up the hours and applying a margin, you are capping your growth. Instead, price based on what it's worth to the customer to have that problem 'gone'. A customer will pay £1,000 a month to ensure their website never goes down, even if it only takes you 10 minutes of automated monitoring to ensure it. That is the power of the managed service model.
The Channel Creation Programme guides you through this four-step process, ensuring that your new managed service is built on a solid commercial foundation with validated demand.
Could your business support another route to revenue?
Evans Channel Creation identifies, validates and builds additional revenue channels from capabilities a business already has — B2B to D2C, D2C to B2B, product to service, recurring revenue or partners — and says so plainly when a channel should not be built. Programme from £1,995 + VAT per month over six months.
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