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February 26, 2015

My Clients Won’t Pay That!

Eric Brown
Business Success Strategist
ConnectWise, Inc.
IT Service Providers Pricing Model | LabTech Software Blog

When I’m helping IT service providers build out their pricing model, almost everyone says the same thing. I’ve heard similar stories from just about every market, and from companies in every stage of the business lifecycle.

In Manhattan—where the streets are supposedly paved with gold and service providers can charge more than anywhere else on the planet—I hear that hedge funds and financial firms won’t pay for the high availability of their systems and failover that is critical to their success.

In the Midwest, where I was told “there are more cows than people”, they say clients won’t pay for anything other than in-person, hourly support. Unfortunately for an MSP’s bottom line, the cows lack opposable thumbs and don’t need mobile device management.

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Bakersfield, CA—the sprawling technology hotbed of agriculture and industry—reports that clients won’t pay for the white-glove style, proactive IT services that generate $10 million per year in revenue for companies like ARRC technology.

It’s All About Perspective

All clients have preconceived expectations. Walk in to any discount store, and you’ll see lowered prices and ‘on special’ items stacked to the ceiling. This model does serve a purpose—usually at 2AM when you desperately need dog food and diapers.

Contrast this with specialty stores, where paying a premium and getting out fast is almost too true to be funny. These stores do a great job of staying out of the “great race to the bottom” in a price battle. They know what customers want, and what they’ll pay to get it.

You can market your managed service offerings using the same concept. You know your clients share some common issues, but every client sees themselves as unique. Your service offering needs to be tailored to help them see how you can meet their specific needs. If you’re addressing a particular pain point, they’ll be more receptive to your prices because you’re presenting them with a viable solution to a recurring business need.

The key is to get the information you need through a systemized discovery process. During that process, here are some questions to consider:

  • Asset tracking/compliance. Do you know how many devices the client has and how many of them are woefully out of date?
  • After-hours/weekend support. Does the client require a faster response during certain times of the day or week? What about late nights and/or weekends?
  • Disaster recovery. Does the client understand the impact of a critical systems failure? Now is the time to explain that “you’ll never know it went down, but we will…”
  • Preventative maintenance. Is systems maintenance being performed on a recurring schedule? Does the client know that the right tools mean maintenance with no end user/business interruption?

These are all services that can be fully automated, which means that you can charge a premium for them. You can work hourly in special cases, but make sure it’s high level technical work, or consulting on future needs, to help your clients realize the true value of your time.

If you’ve gone down the hourly/transactional road because it was too daunting to put the agreements and sales collateral together, we’re here to help. We’ve been where you are, and we can offer real-world insight to get your IT business on the path to success. Contact our Business Success Team to schedule your free session today.

Will Your Clients Pay That?

Too high or too low? Get tips on making sure the price is right for your MSP clients.

Eric Brown Business Success Strategist
ConnectWise, Inc.

As an avid classic video game collector, Eric understands value when he sees it. That keen eye aids him in his ability to help partners with just about any IT business challenge that may arise.

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Will Your Clients Pay That?

Too high or too low? Get tips on making sure the price is right for your MSP clients.