By charging more for certain tech services, your MSP business actually provides greater value over time than you could by going the bottom-dollar route. And here’s something more: you’re always going to find somebody who can go lower than you–but at low rates of cost, you get what you pay for.
In California, there are a ubiquity of under-cutting gas stations who make up their loss by appending additional tiny charges to certain transactions. If you pay at some stations with a debit card, you’ll be taxed an extra thirty-five cents. This helps them offset the cost of processing a “plastic” transaction, and it makes sense. A thousand customers each paying thirty-five cents will bring $350 to the gas station. It’s not without the realm of possibility to expect a busy station might see that many clients in a single day, especially if some event is going on. So, though they may charge two or three cents cheaper than their competition, they get their money back on the back-end through that additional purchase “tax”.
Technological Service Provision Similarities
It’s going to be the same with those underhanded MSPs. They ultimately end up getting their clients back on the back-end through hidden fees, service charges, and in some cases the lack of appropriately-delivered services. A 24/7 help desk that takes two hours to initiate contact while a client in need holds on the other end is a great example of this. If you want your MSP business to provide value, then you want to charge more so that clients don’t have to deal with this kind of thing.
What you want to do is pitch clients on the long-term value of the solutions you provide. As an example, imagine your competition provides the same kind of security suite you do for $20 less a month. They charge $380, you charge $400. So while your services cost clients $4,800 a year, your competition does the same thing for $4,560. But here’s the difference: the bottom-dollar guys, as mentioned earlier, have inferior help desk support. Their clients will wait much longer than yours will.
Here’s where you communicate to clients the costliness of even one hour of downtime. For a company of four employees, downtime costs of $100 would be on the low-end for one hour. For eight employees, $200 would likewise be quite a low downtime cost in an hour. Larger corporations have a much greater level of expense involved in operations, such that if you conduct a Google search pertaining to the cost of one hour’s downtime, you’ll be looking at an answer which puts the number at about $100k an hour.
What you’re looking to communicate to your clients is that by charging them an extra $20-or-so a month, you’re actually saving them thousands of dollars over the competition. You don’t even have to fudge the facts to demonstrate this reality. Fifty clients at an extra $20 a month give your business an extra $12k a year, which can be the necessary money for better security service delivery like that from good help desks. Show how your MSP business spends in terms of value provision and the additional value you can bring to clients, and they’ll likely pay more.