Determining the best data center pricing mix can be challenging if you are responsible for sales and marketing for a managed technology services provider. There are many large providers who offer volume-based rates, which may not be realistic for smaller companies.
For start-up companies, establishing a pricing matrix can be especially daunting, as they don’t have an understanding of the value they are providing or the pains they are addressing for their clients.
Here are two of the most unforgivable data center pricing mistakes which could get you canned, resourced, shown the door, or just plain fired.
1. Pricing Based on Cost Plus Margin
So you’ve sat down with your finance team and looked at your data center's capital and operational costs. You’ve done some research into data center margins, and bam! You have a price grid, right?
Time to sit back with a cup of coffee and put your feet up on your desk while you wait for customers to beat down your door. Mission accomplished! Or is it?
Failing to consider factors like your local or strategic competitors, your unique differentiators, and specific value-added offerings that set you apart might just open a trap door under your chair.
By pricing just on cost plus an arbitrary margin, you might be pricing yourself out of your target market or leaving money on the table. You might be too early in your company’s lifecycle to be demanding industry-standard margins, or you might have expertise and value adds that should command higher prices.
Do you see yourself in one of these scenarios? If so, get back to the drawing board!
2. Don’t Make Your Pricing Too Accessible
Many companies who openly advertise their pricing on their website are appeasing tire kickers and bargain hunters, but losing out on clients who are looking for value-based services, flexible pricing structures, and bundled offerings.
If you have a “loss leader” service like web hosting which caters to a certain part of your market and you want to price openly on part of your website, by all means, go ahead and do so.
For your strategic managed services, have customers call you for pricing which is tailored to their unique requirements. Sure, you may lose some business from clients wanting to see your website's pricing. But if all a prospect cares about is price, are they really the kind of client you want?
Offer service configuration forms on your website, or “Call Back” or text chat on your website for prospects to interact with your company. Make it clear to clients you are willing to provide them with a price quote. However, you want to be sure it is appropriate for the level and set of services which they need.
If you are selling a product, it makes sense to advertise your prices. If you make it too easy for your company to be “column fodder” on a shopping list, you will miss out on clients who prefer to negotiate pricing instead of choosing it from a menu.
Don’t allow your data center pricing to get your company anchored into a certain category, by offering it within a click of your homepage. Invite your customers to tell you more about their unique business requirements, and have the freedom to price your product according to factors such as:
- Length of the contract
- Set-up fees
- Bandwidth usage
- Failover and redundancy
- Level of security
- Amount of storage/users/mirroring locations required
Keep your cards close to your vest on pricing and get invited into the sorts of conversations you want to have for data center services. Prospects who value your services and your expertise, not just your sticker price, are worth the risk.
What other data center pricing problems have you encountered? Please share your thoughts in the section for Comments below.
If you're in the data center, mission-critical, or cloud services industries, or you sell to the data center industry, don't miss our weekly update newsletter -- Data Center Sales & Marketing Institute (DCSMI) Update Newsletter. Get notified about new reports, events, podcasts, and blog posts.