The Dangers Of Warning Your Clients About Price Increases
By Angel R. Rojas, Jr., DataCorps Technology Solutions, Inc.
Price increases: We all hate them but they’re a fact of life.
We cringe when we notify clients about them because it’s never a comfortable situation. In fact, price increases always carry some risk so we have to be wise when we execute them. It’s critical when communicating price changes to do so with the end in mind. Let’s look at three dangers of warning your clients about price increases and what to do about them.
- They will begin shopping for another company. This danger is always lurking when we present clients with price increases. I personally welcome it. We’ve worked diligently to cover as many of our client’s bases as possible so that, when compared to other MSPs, we stand out. This allows our customers to see what else is available while helping them understand the value we provide. But beware if you are found to be lacking in value — this could reveal that your pricing is way off market and could lead to have some difficult conversations. So be sure you understand WHY your pricing is what it is and what your market supports.
- They will become upset and more demanding. I put this one out there because I think it’s a common misconception. We fear our clients will get upset and become more demanding but, in reality, they don’t. One of the strangest phenomena I encounter when switching clients to the proverbial “all you can eat” plan is they actually consume less. I see this fear over and over again when reading forums but it simply hasn’t rang true for us. But still, it’s a real concern and here’s the deal: If clients become noisier after your price increase, it’s an opportunity for a discussion and there could possibly be a revenue opportunity at the bottom of that rabbit hole!
- They will immediately terminate services. This is a heavy one: We all hate losing revenue, but let’s unpack it a bit. If a client terminates because of a price increase there’s a high likelihood value was not being communicated or delivered properly to begin with. This also may be a sign of a poor relationship that may have needed to be terminated anyway. Price increases can and should be used to transition under-performing accounts. What?? You’re not measuring account performance? We need to talk.
BONUS: Your relationship improves. If you are meeting with your clients regularly — introducing new value such as periodic dark web searches, training, self-service, or other offerings — price increases are going to be expected. They are also a sign of a healthy, growing business. Your best clients will understand, will welcome them, and will appreciate that they’re working with a thriving business.
So How Do We Communicate These Increases In A Way That Is Not Harmful?
I recommend a strong, ongoing dialog with clients that happens naturally. By keeping an open communication channel and giving a heads up about features and services you’re adding, price increases are a little easier to swallow. I also like bundling … scratch that, I LOVE it!
By bundling services you can introduce a client to new offerings and roll them into a new and improved plan. Everyone likes getting more for less. So, for example, if you’re going to introduce business file sharing and sync to a client, include it as a part of a managed services offering instead of a separate line item.
About The Author
Angel R. Rojas, Jr. is president & CEO of DataCorps Technology Solutions, Inc. and has been a member of The ASCII Group since 2017.
About The ASCII Group, Inc.
The ASCII Group is a vibrant reseller community of independent MSPs, VARs, and other solution providers. Formed in 1984, ASCII has more than 70 programs that provide turnkey cost-cutting strategies, innovative business building programs, and extensive peer interaction. ASCII members enjoy benefits such as marketing support; educational information; group purchasing power; increased leverage in the marketplace; and multiple networking opportunities. These programs enable ASCII members to increase revenue, lower operating costs, and grow service opportunities. ASCII is the oldest and largest group of independent information technology (IT) solution providers, integrators and value added resellers (VARs) in the world. Learn more at www.ascii.com.