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.
This article provides some tips to help you get your managed services pricing just right.
(1) Decide where you want to “sit” in the managed services marketplace
The IT industry is really no different than any other. There is 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 for managed services pricing
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 is charging can you begin to understand 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. Consider what it will cost you to provide your services and make an acceptable profit.
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.
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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, especially if you also service SaaS and IaaS, be sure to enroll now in our free 7-day eCourse: Go-to-Market Strategy 101 for B2B SaaS Startups and Scaleups.