One of the most common questions I’m asked by IT Consultants I work with is “How do I raise my prices without losing existing clients?”
Whether you’re a solo “IT Guy” or an experienced IT Consultant, a business providing IT Solutions or a Managed Service Provider, if you’ve not raised your prices lately then it’s highly likely you’re undercharging for your services.
Let’s be clear, no-one likes price increases, but everyone expects them.
The cost of inflation means that if you’re charging the same price this year as you did last year, you’re effectively working for less -- and that sends a very clear (and negative) message to your clients about how they should value the services that you’re delivering to them. By ensuring that you regularly raise your prices -- perhaps annually -- your clients will more appreciate the value you provide them with.
So raising your prices is something you shouldn’t neglect, or put off for fear of offending clients. But going back to that question of “How do I raise my prices without losing existing clients?”, the first thing I do is to help my clients re-phrase the question more accurately - that being “How do I keep my loyal clients and help them realise we’re worth more?”
The emphasis here is on loyal clients. All of us have clients who are happy working with us, appreciate our value and are loyal to us.
Letting your loyal clients know about a price increase is relatively simple. Re-emphasis the value you already provide to them. For instance, your loyal clients may appreciate that:-
In short, focus on the value of the services you provide them and the results they experience in working with you.
Pick any or all of the statements that apply to you and craft your conversation or letter around these statements. Your loyal clients who agree with these statements will be more than willing to pay you what you’re worth to continue working with you.
On the flip side of that coin, many of us have clients who we know work with us based on price alone. They’re probably the same clients who we feel we undercharge, who we feel don’t appreciate us, who typically don’t pay us on time and who we probably don’t enjoy working with. Let me be upfront and honest here -- if you have any clients who fit into that category, then they’re probably going to very unhappy that you’re raising prices. Why? They don’t value your work.
With these type of clients who think in terms of cost alone, you’ll need to focus on return on investment (ROI).
For instance, if you save them time - let them know how much time. If you save them money - be explicit about how much money. If you save them from pain -- spell out what that pain would feel like without you to help them.
When faced with these types of ROI statement, most clients -- even penny pinching ones -- will accept your price increase.
And if they don’t -- perhaps with a statement such as “You’re too expensive” or “We can find it cheaper” -- don’t argue with them, but thank them for their business and offer to help them find an alternative provider. If they press you on why you’re prepared to let them go as a client then explain to them that “We pick up a lot of work from clients who come back to us after going with a cheaper service.”
The old adage “You get what you pay for” is one that most people appreciate.
All businesses should regularly -- at least annually -- increase their prices. Failing to do so means that with the cost of inflation, your clients are effectively paying less this year than they did last year. This sends a strong message to your clients that your service is not as valuable as it was last year.
Keeping your loyal clients through a price increase is as simple as focusing on the value that you bring to them.
Keeping those clients you work with who shop purely on price is a case of stating ROI to them, and being prepared to let those clients go if they don’t agree with your calculations.
Either way, don’t avoid raising your prices -- the longer you put it off, the harder it gets for all involved!
Richard Tubb works with MSP's to help them focus on what is important, free up their time and make more money. You don't have to do it alone any more!
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