IT and Business Insights for SMB Solution Providers

Coping with Inflation

With rising costs cutting into margins, channel pros can use this moment to rightsize pricing in a way customers will understand. By Jessica Meek

INFLATION is not going away anytime soon. With rising costs cutting into margins, channel pros face some difficult questions: whether to pass on the increased costs they are facing to clients, what that might look like, and how to handle any potential pushback.

While this may seem troublesome, it’s actually a good chance to raise prices that are likely too low anyway.

Vernon Harrison

“I’m of the belief that we should take advantage of these opportunities to properly get the pricing we deserve in the first place,” says Vernon Harrison, principal consultant at Boston-based CRO Leader. “We find that many [MSPs] aren’t charging what they need and have a difficult time communicating … their value. Here’s an opportunity where you can raise your rates with an empathetic tone. For this reason alone, now is a good time to raise them.”

He adds that MSPs who may feel nervous about raising prices should do so now to take advantage of the fact that “everybody has already educated your client that prices are going up.”

How you communicate any price increases you may be considering is critical, however. Harrison suggests first sending out a notification letter of upcoming changes, followed by a presentation of the new pricing, either via Zoom or in-person. Explain the increases are a result of your own costs going up, he advises, and try to avoid justifying them with line items, which risks customers trying to pick off services line by line.

Allen Edwards, president of Savannah, Ga.-based consultants Eureka Process, adds that small increases can be communicated over email with a mechanism for customers to reach out if they want to. Be clear, though, that the price increase will take effect on the date you specify. “I do not seek permission,” he explains. “I certainly give them a mechanism to reach out and have a conversation, but if you’re too busy to reply to me, this increase is effective as of X date … but they can certainly call me up and discuss it before then.”

Any such call may find you facing objections from customers, so it’s important to be able to explain the hike in a manner they will understand. The fact that everybody is raising their prices, Harrison notes, gives you the opportunity to take the “feel, felt, found” approach.

About the Author

Jessica Meek's picture

JESSICA MEEK is a freelance technology and financial writer based in New York.

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