Pricing Services
For many IT solution companies, pricing seems to be a never-ending game of chance. When do you raise prices? When do you drop prices? What do you charge to be competitive? How do you stay profitable?
These are all valid questions and the truth is, there is no real right answer when it comes to pricing. It has been conceived in the IT community that you must get X for certain services and you must charge Y for others. This has been developed by certain advisors and coaches based on past experience in certain areas.
Though some of this can be good information and provide a good starting point it is by no means the definitive. Getting pricing right can take time and unfortunately it is sometimes a gamble with the potential of losing business. Price too high equals lost business, price too low and the potential is lost revenues or worst yet possible negative revenues.
The key is in research. This means putting on your stealth hat and calling the competition, or having someone do it for you. Researching the competitions pricing will give you the best insight into your area. It is recommended to gather as many prices as possible to give the most accurate picture.
Once you have gathered the information necessary, you must determine a good place to be with your pricing. If you are new to the area you may want to sit at the lower end of the pricing spectrum or provide incentives to build a book of business. This could mean providing promotions or introductory service offerings to gain recognition in the community.
If you are an established business you can price your services at the top of the pricing average. It is important if you do this, to utilize your referral network as well as reputation to market higher quality, trusted services. The nice thing about an established business is you have more opportunity to provide discounts to win business.
Be assured that initially you will not have the perfect price. Pricing is ever evolving and changing. Established businesses can raise prices slightly each year with little push back from customers but make small price increases or you may risk business.
One controversial notion is to pass on savings when you meet tiered price savings from IT vendors. Generally IT companies have added these savings to their revenue and there is nothing wrong with this. It may however be a significant differentiator to show customers savings when you meet tiered pricing goals.
No matter how you price your services, make sure to pay attention to your sales. Monitor the reasons why potential customers choose other providers by simply asking them why they went with the competition and don’t be afraid to make adjustments to your pricing on the fly. When it comes to pricing nothing is set in stone.
Frank Gurnee
VP, Channel Services, ExchangeDefender
(877) 546-0316 x4777
frank@ownwebnow.com