Even when they must, many MSPs refuse to raise prices. Instead of generating more MRR to cover additional costs, these business owners settle for decreasing profit margins. They don’t have to, but they do. For them, they’d rather not have difficult conversations with clients about price increases. If this sounds like you, there are steps you can take to ease your way into these sensitive discussions.
Now, there are various reasons why you may want to increase your prices — many of which are valid. For instance, maybe one of your vendors is raising the price on its solution, so for you to maintain a high enough margin on the services you provide to your clients, you increase your prices.
There’s nothing wrong with that. In fact, many of your clients would do the same in your position. First and foremost, you must do what’s in the best interest of your business. If raising your prices enables you to deliver more value to your clients, that’s what you must do.
There are a few ways to broach the subject with clients.
Focus on How the Price Increase Delivers Additional Value
When you raise the price of your offering, you must also add additional value to it. If you neglect to do the latter, you’re going to run into problems when presenting your reasonable price increase to clients.
After mentioning your price increase, you want to shift the conversation away from the numbers as soon as possible. Don’t let your customers get too caught up in the price increase. Redirect the discussion to how the price increase enables you to deliver additional value to them.
Highlight the additional services they’re going to receive as a result of the price increase. It’s important to break this down for them. Nobody wants to pay more if there aren’t any additional benefits. Your clients want to know you’re putting the additional funds to good use.
Did you add additional security features to your offering? Did you hire more employees to ensure your clients are receiving quality customer service?
Find the additional value in your offering and sell it. It’s that simple. It’s always a lot easier to sell to existing clients than prospects.
Communicate Early and Often
When your clients are more familiar with your business, and the value you and your employees deliver to them on an ongoing basis, price increases are less likely to cause concern. Instead of being skeptical and confrontational about your motives, clients are more likely to be understanding.
You should also reach out to your clients as soon as possible about a price increase. Let them know well in advance. These are difficult conversations to have, but don’t drag your feet. Giving your clients the heads up about your offer’s price increase enables them to prepare and budget accordingly.
Be Prepared for Churn, but Don’t Let It Bother You
Clients come and go. You’re bound to lose clients. It happens to the best of us. No matter what you do, some clients will use your price increase as an excuse to leave you, but don’t let that bother you.
Be confident in the services you provide by standing firm on your price, even when you increase it. To avoid losing clients, many MSPs decide against raising prices. This isn’t the way to run a business. You’re going to have to raise prices at some point. Everything goes up. You can’t remain stagnant.
The clients you lose to price increases aren’t the ones you want to keep. They’re the ones holding you back from taking your business to the next level. You want clients to value the results you deliver, not your price tag.
Nobody wants prices to increase, but they do. While these conversations aren’t always the easiest to have with clients, they’re necessary at times. Prepare ahead of time, and your clients won’t mind the additional charges to their invoices.