The Price Is Right–Maybe
Before joining ExchangeDefender and Shockey Monkey full time in September 2012, I was a business owner of two I.T. VAR/MSP businesses spanning over a decade. That said, I am fully empathetic of the decisions that have to be made by all who hold that position. Being one of two Partner Communication Managers working for OwnWebNow Corp. (Anastasia Wiggins being my colleague), I speak with our partners on a daily basis. Inevitably, one of the subjects that come up doing a partner conversation is how much they are charging for services rendered–whether we are discussing our services or labor costs in general. Ultimately the conversation starts by the partner asking me what the going rate is for other partners reselling our services. My answer is always the same: It depends…
The reason for such a vague answer is because the answer primarily involves taking into account two major considerations:
1. The location the service is being rendered, i.e. city/State, and/or region; and
2. The time/complexity it takes to render said service, e.g. setup time, monitoring time, complexity of the technology, etc.
Let’s delve further into these two considerations and come to a more defined answer for your particular business.
The Location of Render Services.
As Partner Communication Manager, one of my jobs responsibilities is to attend I.T. events that ExchangeDefender and Shockey Monkey sponsor. These events are held all over North America. The summer months have definitely tested my love of travel. However, by visiting these different cities and regions of the United States; I have come to understand that Midtown New York can charge $3.50 for a 20 ounce Coke Zero that costs me $1.50 in Schaumburg, IL. The same is true with virtually every product or service between the two aforementioned locations. Similar to the real estate market, the location (location, location) will greatly dictate your pricing. Densely, fast moving cities tend to price higher than more rural, spread out towns. The reasoning is maddening to understand because most times it simply boils down to the fact that people are willing to pay more for services rendered in cities that never sleep. Even stranger, this can be totally independent concerning the amount of competition available to the customer. By that, I mean even if there are numerous competitors in the area, people will still pay an inflated price in bigger cities. This is due to something called involuntary competitive pricing. This is where a price for a particular service was set by a business and the competition set their pricing +/- 10% to show an added value or discounted price while maintaining close proximity to similar business offering like services.
The Time/Complexity to Render Services.
The old adage still applies: Time is money. And when the complexity of the service rendered increases, ultimately the time it takes to implement and/or monitor said service increases as well. As a result, you could be looking at a nice pay day. However, the inverse is also true. If your service can be seen as less a specialty and more a commodity, you may have to supplement your income to make ends meet. How can your services be seen as commodities? Increased competition, for one. The lack of complexity is another. If end-users are willing to take on the additional pain of implementation and monitoring services to reduce their operating budget, there isn’t much you can do to win that business except provide additional value added services they may not get by taking on the responsibility themselves. Be careful of this, however. If you give away too much, you will end up working twice as hard for less money. Never, ever, ever work for free. Assuming you are a for profit business, never forget that one of the primary reasons you started a business was to make a profit!
The Sales Pitch (You can skip this part if we ever spoke on the phone about ExchangeDefender services.)
ExchangeDefender is a partner-driven company–meaning without our partners, we might as well close shop and sell empanadas. We price our services to you with the idea that you can make as little or as much as these two considerations allow. I have seen markets where partner can make as much as a 33% profit margin on our products and services. Other partners literally give our products away as value added services in order to balance out their labor costs. The latter is normally performed to illustrate good form in giving something to the customer at no charge to you. In other words, they simply pass on the cost of the product to the customer or carry the cost themselves in order to sign an annuity contract. Point being, if you need assistance in reselling any of our products, pick up the phone and give me a call. You have 99 problems as a business owner, but making money off our services shouldn’t be one of them.
Michael D. Alligood,
Partner Communications Manager
ExchangeDefender | Shockey Monkey
877-546-0316 x707