19 Apr Playing the Pricing Game for Profit
The biggest challenge preventing many managed service providers from growing is pricing. If you don’t charge enough, you struggle to make a profit on the services you deliver. You also undermine the perceived value of your offerings. Most decision makers know they get what they pay for, and you should reinforce that notion. If your intention is to position your services as being better than your competitors’, offering steep discounts to win new business is going to hurt you. Consider implementing these ideas into your pricing strategy to improve your bottom line.
Get out of the hourly pricing rut
When providing a quote for your services, you may be tempted to charge an hourly rate with little consideration given to a value-based pricing strategy. However, this approach leaves money on the table.
While it might only cost your business $75 per hour to deliver services, simply marking that number up to $150 per hour is a mistake. Instead, look to the value of the work you’re doing.
Charge for reliability
If you’re doing a great job as a managed service provider, there is a high likelihood your clients will take for granted that their computers and networks are operating smoothly with little downtime, performance issues or security breaches. Unless you proactively communicate all the things you are doing to keep them up and running, hassle-free, your clients may question the value of your services, making it even harder to ask for more money as the cost-of-service delivery increases.
Say goodbye to clients you’ve outgrown
Some price-conscious clients are simply looking for a bargain and won’t see anything past your price tag. It’s up to you to do a cost analysis to be sure you are actually making money with every client. If not, use your documentation to show them your value and adjust your pricing model to reflect your worth. If they’re unwilling to make that adjustment, then it’s time to let them go.
Don’t budge on budget
Offering discounts and underselling your services leads to dissatisfaction among clients and stifles your ability to deliver your best work. Despite a client wanting the lowest price possible, what they really want is the greatest value. That level of performance is only achieved by fully funded IT projects, and you are the person best suited to evaluate what that amount should be. Don’t sell yourself short where it counts the most—your bottom line
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