Guest Column | April 17, 2018

The Benefits of Warning Your Clients About Price Increases

By Mike Bloomfield, Tekie Geek and ASCII Group member

VAR / MSP Pricing Strategy

It’s that time of year again; reviewing contracts and sweating over the fact of having to notify clients about pricing change. Why do we get so concerned? Other industries have no issues with raising prices — think of the increases we have come to know on a yearly basis including electric, cable, water, and property taxes to name just a few. However, our increases usually come with improvement of our services yet we still worry about customer’s reactions.

Luckily, I have some good news: It’s time to stop worrying because there are more benefits than downsides of warning our clients about price increases.

  • Notification Of Service Improvements

When notifying our clients of price increases we always provide a complete breakdown of included services, highlighting exactly what has changed in our Managed Service Packages. Along with the breakdown, we provide detailed summaries on newly-added services, giving us an opportunity to explain why we made these changes and how it will benefit their business. In doing so, we are educating our clients and helping them understand exactly why we made the change, as well as see we are helping to invest in their business.

No business owner will be put off on an increase as long as they are getting an increase in service beneficial to their own goals. We added PII End User Training to all our contracts this year due to rising cybersecurity risks that affected every one of our clients. After the rollout, our clients were appreciative with the added offering as they also saw the importance of training to their employees and that we were looking to protect their business.

  • Thought Of As “Premium Product”

By raising our prices, our clients begin to think of our product as a “Premium Product.” In doing so, having a higher-priced product that is worth the higher price doesn’t mean fewer clients, but quite the opposite. It will mean more clients that will keep coming back because the product is of superior quality.

When you have a superior quality product, it helps earn your client’s trust and satisfaction in the long run. Take a look at the big, Seattle coffee chain companies. They have a higher price compared to other coffee shops but a huge market share and have been known as the premium cup of coffee for many years. They are continuously increasing their product price, but they still hold on to a large clientele. This is because people enjoy the quality of the product; therefore they don’t mind spending a little more money if the end result is something they are happy with.

  • Improved Clientele

In order to achieve continued success, we are always on the lookout for great opportunities. Many companies practice shaving off the bottom 10 percent of their clients to make way for improved clientele. When raising our costs, the clients we lose due to the slight increase tend to be the clients we didn’t want to begin with. Allowing ourselves to increase costs makes way for those who understand the importance of the product and are willing to pay for the best service.

  • Focus On Areas Of Improvements

Raising prices is also an appropriate time to focus on areas where you can improve your business to ensure you are in top shape. It’s important you are providing the highest level of customer service and meeting all service level agreements spelled out in your contracts. Use this time to also advance any areas of your operation that may not be as efficient as needed and be sure to let your clients know about the great improvements that will be rolling out soon.

There are other ways to notify your clients of price increases; many businesses notify them from day one by having the price increase built right into their agreements. By having a pre-determined increase built into your contract, your clients will know at the time of signing what to expect year-after-year in regard to price increases.

Stop worrying about how and when to notify your clients about price increases and do what is best for both your business and their businesses. Roll out your updated prices that will allow for your service improvements, improved operational efficiencies, and “premium products.” By doing this, your clients will appreciate your services and happily pay the increased rates. The keys are to always be honest, be detail oriented, and work on service improvements for continued success.

About The Author

Mike Bloomfield is president of Tekie Geek and has been an ASCII Group Member since 2016.

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.