Yes you can be too cheap. And it's a sales killer

Yes you can be too cheap. And it’s a sales killer

Paul Green business owner's mindset, Content, getting new clients, increasing profit, selling more to existing clients

I was stunned into silence when he told me the price.

“Sorry, say that again,” I blurted into the phone. And wrote down the figure for the second time on my pad.

“OK, let me tell you again what I wanted, check we’re talking about the same thing,” I said.

I couldn’t believe the price he’d given me. It was TOO CHEAP. And that made me doubt I was buying the right thing at the right quality…

I’m having a small piece of legal work done at the moment. And my lawyer has told me I need to find a different lawyer to get a statutory declaration sworn.

This has to be done in person so they can verify you are who you say you are.

Have you tried to find a lawyer in an office at the moment? They’re too busy working from home, questioning their life choices 😃

I literally rang 7 or 8 firms near me, to try to find someone who would offer that service and was in their office.

Eventually my lawyer came up with a good suggestion… instead of finding an actual lawyer, I could find a commissioner for oaths. This is someone you can pay to legally witness your signature.

Another 5 phone calls later and I found a guy who works from home, and is happy to receive visitors. I’m going to see him this afternoon.

Now let’s put this in context… all he has to do is verify my ID, watch me sign something, fill in his details and counter sign it.

It’s 5 minutes work. But it’s a “legal” thing, right? So that means:

  • He’s had to do training. In fact he has 30 years’ experience in doing this
  • In counter signing something, he’s taking on a certain amount of responsibility for verifying my ID
  • He must have insurance and other costs
  • There’s an opportunity cost to doing this job. He’s got to shave today and make sure he’s at home when he said he would be

I was expecting to pay about £20 ($25), maybe £30 ($37).

But the price he quoted me was… £7 ($8)

😳

Not even a round figure!

And I’ll be paying by Covid-friendly contactless card… so he’ll be losing some of that to the card company.

I ended up checking three times that I was buying the right service, and that he was qualified to do it.

To many people, cheap is the complete opposite of enticing. It’s off-putting. It’s a sales killer.

In a normal market, I wouldn’t touch this guy with a barge pole. Too cheap. Too risky. Better to pay the £30 fee to a “proper lawyer” and make sure there are no silly mistakes.

Not everyone buys the cheapest. Because in our minds, price reflects quality.

In fact, I would argue the vast majority of the B2B buyers you’re interested in, would be put off using your MSP if you were too cheap.

So… when was the last time you looked at your prices through the eyes of your prospects?

Even while sitting on the edge of a global recession, this is not a time for cheap prices. Cheap prices attract cheap clients.

There are two sets of prices to look at:

Front end prices

This is what people see when they enquire. The price per user or device.

They will try to compare this to other MSPs, even though your packages will be different. Watch out for that and don’t let them compare apples to pears.

The goal here is to look like good value for money. That’s an entirely different thing from being cheap.

You might have a high per user price. But you bundle in everything they need. This kind of approach works best when you give them good, better, best options. So they can pick the bundle level they perceive is right for them.

Back end prices

These are prices that buyers typically don’t think about when they’re picking an IT support company.

The cost of ad-hoc work. Replacement hardware. New projects not agreed at the start.

It’s always easier to nudge up your back end prices. Because they’re much more likely to be accepted by clients.

This is why money saving experts say never to stay with the same insurance company year after year… because when you just automatically renew, the pricing becomes back end… and they nudge it up year after year.

Be cautious adjusting your prices… but not scared

Certainly use caution when increasing prices with your existing clients.

But for brand new clients, you should always be reviewing where you sit in the marketplace. Ideally you’re looking to be at the top end – be one of the most expensive MSPs in the marketplace.

So long as you have the quality and still offer value for money, you will attract better clients and make more net profit for exactly the same amount of work.

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