Getting your managed services pricing exactly right is a fine balancing act. In an ideal world, people would pay more attention to quality than price, but cost often proves to be a deciding factor when a customer chooses between prospective service providers.
In this article, we provide some tips to help you get your managed services pricing just right.
1. Decide where you want to “sit” in the marketplace
The IT industry is really no different than any other. There are a range of products out there from “bargain basement” to “prestige,” and you need to decide where on this spectrum you wish to place your service offering.
Of course, sitting right in the middle is always an option too, but if this is the strategy you choose, you need to find another way to make your service stand out.
2. Think about where you’re located
While plenty of IT support is now handled remotely, where your business is physically located will, inevitably, have a bearing on the kind of prices you can charge. For example, you’re unlikely to get away with charging “city center” prices if your potential clients are in quiet, provincial towns.
3. Compare the market
To help you arrive at your final pricing structure, have a look at the competition. Some managed services providers are often reluctant to give away their pricing structures, so you may need to pose as a potential client to find out the information you need.
Only once you’ve found out what your competition are charging can you begin to get an idea of what you should charge yourself.
4. Do the sums
Once you’re in possession of all the facts, it’s time to do some number crunching. Have a think about what it will cost you to actually provide your services, and to make an acceptable profit on top.
Consider modeling your pricing structure in several ways. For example, you could decide to aim for the more “premium” end of the market by targeting cash-rich businesses and charging more for services. This can potentially mean needing fewer clients to meet your financial targets. However, it will probably take you longer to sign up these clients, and you’ll have to provide an extremely good service to maintain their business.
One thing that’s very important to consider here is that it’s always easy to reduce your prices, but far more difficult to increase them once clients are already signed up. Don’t lose sight of this fact. Above all, make sure you give establishing pricing the time it deserves.
How did you go about determining your managed services pricing? Let us know in the Comments box below.
And to follow-through on the tips introduced in this short article, be sure to watch the Inbound Revenue Acceleration Webinar for Managed Services & IT Consulting.