Pricing is one of the most difficult, yet critical, decisions any business must make. Price too high and you’ll limit your customer base. Price too low and limit your profits. Determining a marketable value on what your business offers is a delicate balance of many interdependent factors.
After helping thousands of technology service providers strategize for success, ConnectWise has identified five basic building blocks of a strong pricing foundation.
1. Know what you spend--and why.
While fancy financial formulas are necessary for the specifics, the goal is a simple one—you always want to make more than you spend. Setting an effective price point starts with understanding your breakeven point. That means having visibility to both fixed and variable costs, so you can determine areas for improvement.
2. Make yourself valuable.
Find that special something you bring to the table—something your competitor doesn’t offer—and let your customers know about it. If they view you as basically the same as everyone else, your only competitive edge will be price. And you can only afford to go so far in that arena. Dare to be different. It pays.
3. Involve your ideal customers in building a pricing strategy.
Learn what your ideal customers value. Research the pain points they’d like you to eliminate for them and create buyer personas for them. Ask how much they think is too much to pay for those services. Analyzing such data not only helps determine realistic pricing, but can also pinpoint bundling options.
4. Prove your worth.
Even the most loyal customers like to know what you’ve done for them lately. Plan a quarterly review of specific positive results your services or products have made possible. Any future price increases will be easier for clients to swallow if they trust you to give them their money’s worth.
5. Be smart about raising (or lowering) prices.
The more unique your offering, the less price-sensitive your customers will be. Even so, small increases are always preferred to big hikes. And be mindful of how discounting may negatively affect a client’s perception of your value.
Turn the pricing game into a winning game plan for financial gain.
To learn more details, download our eBook Pricing: 5 Proven Tips for Maximizing Your Profit.
Adam Slutskin joined ConnectWise in 2010 as a Director of Sales and is now Senior Vice President of Worldwide Sales. Adam leads a global sales team of 100-plus colleagues on the ConnectWise Business Development, Channel, Sales Operations, Account Management and Sales teams. Adam’s efforts over the years have resulted in record customer attainment and revenue growth. Under his leadership, the sales team’s mantra is "customer first." Adam’s uncanny ability for uncovering hidden talent, and his dedication to putting the customer first has enabled him to lead his team to record sales month after month.Guest blogs such as this one are published monthly and are part of MSPmentor's annual platinum sponsorship.