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Sales & Marketing


Are You Charging Enough for Managed Services?

  • Written by Mitch York 1
  • December 28, 2008
Recently, I was updating my contact database and asked my newsletter recipients to answer a question along with giving me their mailing info. The question was, “What is the biggest challenge you faced when making (or thinking about) the transition from being an executive to being an entrepreneur?”

I got a whole bunch of interesting answers. Several related to how to monetize one’s skill.

managed services prices and feesRecently, I was updating my contact database and asked my newsletter recipients to answer a question along with giving me their mailing info. The question was, “What is the biggest challenge you faced when making (or thinking about) the transition from being an executive to being an entrepreneur?”

I got a whole bunch of interesting answers. Several related to how to monetize one’s skill.

One respondent wrote the following to me:

The biggest challenge when making the transition from executive to entrepreneur was conquering the financial negotiations that come along with consulting and being able to attach a monetary value to a service. I know there is documentation out there that women have trouble asking for raises etc. and I assume it may have stemmed from that. Thankfully, I have smart confidants/friends and one in particular  who said “What is the worst that can happen – the client will say no or give you a number they are more comfortable with. Ask for what you think you deserve.” And in my 7 years of consulting, no clients have ever balked at my fees or my contract.

This is a useful lesson on many levels.

1. It’s natural for new entrepreneurs to undervalue what they charge for services.  So many people charge based on their costs and not the value of what they provide. I have coached many people who doubled or tripled their income once they understood the intrinsic value of their service to their customers. Thinking of what the client’s outcomes are–in terms of the time they can afford to devote to seeking out a reliable service provider, the savings they can achieve by using you, the revenue they will be able to generate based on what your skill allows them to do–will help you feel confident in charging a price that properly and lucratively compensates you.

2. The idea of “what’s the worst that can happen” is so important. How many times have you negotiated with yourself, rather than letting your client do that work? Rather than just crossing the negotiating bridge when you reach it, many people have an internal conversation with themselves in which their price goes down a bunch before the client ever gets the opening offer. You can’t negotiate up once the client says yes. And it’s perfectly fine to negotiate down if and when necessary.

3. If no one pushes back on price now and then, you may not be charging enough. An old boss of mine in the magazine advertising business used to insist we raise our rates each year up to “the groaning point”–the level at which the customer groans, grunts, screams, or otherwise let’s you know you’ve hit the limit. Not bad advice.

How do you know if you are charging enough? Tips and tricks welcomed.

MSPmentor contributing blogger Mitch York coaches executives who are evolving into entrepreneurs. He is a veteran of high-tech media and an entrepreneur himself. Find York — and his personal blog — at www.e2ecoaching.com. MSPmentor is updated multiple times daily. Don’t miss a single post. Subscribe to our Enewsletter, RSS and Twitter feeds.

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Sales & Marketing

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