Why You Should Raise Your Prices Today!
When is the last time you raised the price your client pays for your products or services?
Ask any IT Solution Provider or Managed Service Provider (MSP) this question, and the majority of the time the answer will be “Too long ago”.
Why do most MSP’s avoid increasing their prices? Because it makes you feel uncomfortable. There is a fear that it will upset your clients - that they will reject the price increases, be outraged and take their business elsewhere.
But by avoiding raising your prices regularly, you’re setting yourself and your business up for problems down the line. Here’s why.
Professionals do increase their prices - and regularly
Every IT business wants their clients to see them as Professional - that goes without saying. But to be seen as a respected Professional means to value yourself and your services properly.
When you don’t increase your prices for months or years upon end, what impression do you think that gives to your clients? It gives the impression that you don’t value your time and expertise to charge enough for them, and if you give that impression to clients, why should they feel any differently?
Increasing your prices on a regular basis - and I’d suggest this be at least annually - sends a message that you work with those who respect your time, experience and expertise, not just those who are looking for the cheapest deal.
Price increases are expected
Regular price increases may not be welcomed by individuals or businesses in any walk of life - but they are expected.
Your utility providers - such as Electricity, Gas and Water - increase their prices every year. Your Broadband and Telephone provider also does. Do you like this fact? No. Do you accept it? Absolutely - it’s expected!
The annual rate of inflation means that any business that is not increasing its prices - even if only by a few percent to stay in line with inflation - is effectively offering an unsolicited discount to its clients.
If I flipped the question from “Are you comfortable letting your clients know about a price increase?” to “Are you comfortable offering a 5% discount across your entire client base this year?” - which question makes you more uncomfortable? For most sane business owners, it’s the 5% discount which will reduce turnover and profits.
Yet by not increasing your prices regularly - at least in line with inflation - you’re effectively offering an unsolicited discount to your clients.
Are you happy for your turnover and profits to fall this year? Are you happy to do the same work for less than you charged last year? If not, you need to increase your prices.
While broaching the subject of price increases with clients can be an uncomfortable subject, price increases are an expected part of doing business in any walk of life.
Failing to raise your prices regularly not only means you’re doing the same work (and probably more!) than you did last year - but charging less for it - it also sends the message that you don’t value your time or experience, and so your client needn’t treat you with respect either.
For these two reasons alone, if you haven’t increased your prices lately then you should consider making this your top priority. Do it, now - it make feel uncomfortable, but it has to be done for the good of your IT business and for the good of your relationship with your clients.
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!