Practical Tips on Pricing Your Managed Services

Competitor analysis conceptYou’ve put a ton of research, thought, and effort into choosing the managed services you offered, and you already know that pricing your services right is immensely critical.

But, if there’s one thing many managed service providers (MSPs) still need to master is pricing their products. While there are plenty of ways to price your managed services, before deciding on a pricing strategy, consider these tips first.

1. Be clever about increasing prices

You don’t necessarily have to stick with just one price forever, because increasing costs, provided that it’s at the right time and for the right reasons, is actually a necessity for MSPs. But refrain from increasing prices due to greed or jealousy.

For example, you don’t need to increase your prices just because you found out through your competitor and price tracking efforts that a competitor increased theirs and are enjoying benefits. If you find that you failed to make your target profit for a certain month, figure out why and go from there.

2. Sell essential bundles and not just single items

Although it’s great that you want your customers to have flexibility over choosing what services they want, this strategy often backfires since many customers don’t really know what services they really and often leave out crucial services.

To counteract this, consider putting together an essentials bundle made up of core software, hardware, and services. You might need to allow for some flexibility, whenever it’s appropriate, but’ you would generally avoid the stress of selling just single items or services.

3. Consider value-based pricing

With value-based pricing, you set prices mainly based on a service’s estimated or perceived value to your customer instead of based on the service’s actual cost.

The beauty of this pricing strategy is that you’re essentially marketing your expertise to your customers, and not the actual cost of the service, so they’ll see more value in your service. Focusing too much on cost would result in difficulty maintaining customers and attracting new ones.

Getting your pricing just right is tricky. However, following the tips above would rid you a ton of unwarranted stress. It is likewise vital to remember that setting proper prices for your managed services does not necessarily mean that you must offer your services on the cheap.

Put simply, if you successfully manage to highlight the value of your offerings, it might cost a bit higher than some of your competitors, and smart customers would know and appreciate this.