News Article

8/23/2017

Don’t Be Afraid to Raise Your Prices

Most business owners look to efficiency to eke out more profit. If they want to improve their business and make more money they might install a new software platform designed to remove manual effort thereby getting more from the same number of employees. They might re-organize their processes to better and more efficiently get the same work load done. This is great, these are all things you should be doing in your business on a regular basis. However there are also times when you just need to raise your prices. As a matter of fact, your clients expect you to. Unless you have trained them otherwise of course. Many people are terrified of charging more for the same service. They are afraid customers will balk and go elsewhere, or they are afraid that they will be seen as trying to make more money at the expense of the little guy.

However many times real costs increase and cannot be fully offset by better technology or more efficient processes. After all, your staff’s salaries, rent, taxes, insurance and most other costs rise each year. Sometimes you’re profit is truly shrinking. In these cases you need to look at the areas that are contributing to this increase and charge more there. For example, if your on-site customers are driving up your costs then maybe you should up your drive time fee or your first hour rate. If on the other hand your managed print customers are cutting into your profits, you may need to adjust only your managed print contracts. But make no mistake, you can’t be gun shy to increase your prices or your rates. It is often easiest to do it at the beginning of a new year. In fact, you could even send out an advance notice letting your customers know your rates will be going up and if they want to get any last minute work or blocks of time, you will be happy to honor the old rate as long as they commit before the year ends.

Some other things to consider are “green contracts” that have small yearly increases each year. Large sophisticated clients will actually be concerned if you don’t have built in yearly increases in your agreements. If you build in a 3-5% increase on a regular basis you will not have to go through the internal debate about larger increases. The key is to stop thinking of your services as cost savings and start thinking of the value that you provide your clients. Without financial stability how long will you be able to provide such value.

At the end of the day you can’t charge the same prices you did in 2005 and if you smartly push your price up it is likely the only thing you will see is more profits at the end of the year.

Contact MSP-Ignite today to find out more about how you can start to fuel growth by tapping the resources of other IT leaders. Visit us at www.msp-ignite.com or call us at 888.972.0236 or email us at msp@MSP-Ignite.com to get started today.

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