How To Price Managed Services To Attract High Value Clients

Robin Robins IT Sales Leave a Comment

I hear all the time from MSPs and IT business owners that they want clients that value IT services. One step that is critical in attracting well behaved clients is starting by pricing based of the value of your services. If you don’t value the worth of what you are offering, how will a prospect or client value it? I know most business owners discount because they are scared of losing a deal, and that is a normal fear. In today’s video blog TMT’s VP of Client Coaching and CEO of Vector Choice, Will Nobles asks his Head Client Coach, Jeff Farr, to explain what MSPs should be charging.

QUESTION: What should MSPs be charging in the marketplace?

Jeff Farr: When I’m coaching MSPs, most don’t really understand how to price. They’ve got some ideas of what the market, what they think the market is, but most of the time they’re focused in on their local geography. The reality is, as you get exposure to more providers, bigger providers, you quickly realize that most of the time it’s our own limitations. We’re not comfortable charging $200 a user or $250 a user or $300 a user, right? One of my businesses, we charge over $300 a user per month. People are surprised by that and ask how do you do that? If you are charging $40 or $50 a user, well, that does look like a big difference but there are tried and true ways to increase your price for services. The analogy I’ll give you is, if you go to the car wash and you just get the basic car wash, no wax, just drive through, it’s $12 Or you can get the inside done, all the tires and they can wax the car and it is $48. So, that concept is what I’m talking about. How do you get a bigger, better overall service offering? And by the way, when you do that, you start to look more strategic. You start talking about more strategic things. It builds credibility, authority, and trust-based marketing. All of that comes from you learning how to get bigger and better, meaning you can charge more.

The first MSP that I ever ran was in a small market, about 200,000 people. It was not a big city, and we did about $4.5 million out of that one market. We were still growing so the concept that being in a small town or rural part of a state would inhibit growth was simply not true. I know one guy in Arkansas, a town of about 20,000 people, and he is doing $1.3 million. It starts with pricing and going after the type of clients that you want, the services you want to offer, and all of that is a mental construct. When I am coaching someone, I push them to be aggressive, to get bigger, and ultimately, I want them to grow some wealth.

It Is A Mindset

I don’t want you to have a job in a business. It’s a mindset. If you want to be a tech, if you started a company to be a tech, you’re always going to be a tech. If you start a company to be a business owner, you’re going to grow into a business owner. Trying to replace yourself as a tech is honestly a better option because then you can help grow the company. You can focus on growing the business. When you hire a level one tech and you are the engineer, you’re having to fix the servers, and you have to train the new hire. Now you just added a second job. It is a mindset. You have to be comfortable growing and raising prices to scale your business.

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