MSP services rise in cost as the value of the dollar decreases. This is inflation. It’s something that may be described as “natural” in terms of economy by some. Others are disturbed at how the dollar has been knocked from its place of prominence in global affairs. The dollar doesn’t buy what it used to. As technology develops, charging what you did several years ago for the same service is actually leaving money on the table. But how do you increase your costs without driving clients away?
Certainly, clients should understand about inflation, but everybody likes to save when they can! Following are several strategies to help you increase prices without driving clients away. A few tricks you might try include:
- Tiny, frequent cost expansion
- Value-centered discussion
- Understanding operational limitations
- Honest operations
Tiny, Frequent Cost Expansion
One thing you should do for your MSP services, in terms of cost expansion, is incrementally upgrade expenses at intervals. Consider a curve of economic inflation over time, and strategically raise prices in a way which follows that curve. Sometimes, you’ll increase more or less, depending on what it costs you to provide such services. Many clients won’t even notice, as they’re dealing with inflation on their own end. Some will, and you can use the reality of the market to explain the change.
Ensure you know the value you bring to clients. You must elucidate this to them when you are in a position where a price hike becomes necessary. Something else which is wise is not to increase the cost of services past a value provision threshold. Also, consider value provision from competitors. As you raise prices, ensure also that you still provide more value for less cost than they do if such a thing is operationally feasible for your business.
Understanding Operational Limitations
Here’s a good rule of thumb: raise your costs until someone pushes back, then coast at that level for a while. Here’s the thing: staying in business is expensive. Even if you cover all your bases, taxes, the unexpected, employees, marketing, competition, troubleshooting–these things add up! Also, know that some clients will refuse payment of new prices. Backing down isn’t a good idea, but it’s not a bad idea to keep certain legacy clients on at a previously established price. Cellphone companies do this all the time. Be discrete about it and know your statistical level of incoming and outgoing customers to ensure you’re properly effective in these efforts.
Honesty is always the best policy. You need to tell the truth to clients. So, you’ve got increased operational expenses. If your MSP is going to remain cutting-edge, you’re going to have to acquire new products and services. This isn’t cheap! Tell clients of your costs, help them to understand that you’re not raising prices to trick them but so that you can continue to provide them the value you have.
Be Prepared for Anything
Your MSP services must increase prices incrementally, and this will ruffle some feathers among clientele. But the cost of not increasing your prices is likely going to be greater than a few lost clients. So, don’t let any unfavorable reactions keep you from properly running your business!