Does your MSP keep losing business on price?

Does your MSP keep losing business on price?
cheap photo
Photo by cdsessums

Does your MSP keep losing business on price?

I was recently speaking to the owner of a Managed Service Provider (MSP) business who shared with me that they were becoming frustrated with the amount of business they were losing to cheaper competitors and wondered how they might tackle this situation.

“We are already keenly priced, but the post-sales feedback we get from prospective clients is that they’ve chosen to give their business to someone cheaper”.

My advice to that MSP owner? Raise your prices and then watch as you win more business.

What type of client is your pricing attracting?

While it might seem counter-intuitive to raise prices when the prospects you’re meeting with are telling you that you’re losing their business because they’ve found somebody cheaper, there is method to this apparent madness.

By pricing your MSP service too low, you’re attracting the type of client who will shop on price, not value. No matter how good your service offering may appear, the client will always go with the cheapest offering – and I’ve some bone-chilling news for you, there is always somebody out there who will offer to do the work cheaper.

You could lower your prices further, but take a guess what your competitors next move will then be? That’s right, lower their prices again!

So how does raising your prices help you win more business?

The perception of price versus value

value photoAre you familiar with the old adage “If it’s too good to be true, it probably is?”. When you price your services too low, you’re sending a message that you’re competing in the cheap end of the market – one where people shop on price alone, not value.

If you raise your prices to where you know they should be – which is probably well above those of your cheap competitors – then you’ll start attracting clients who listen to the the message you send about the value you provide (rather than blindly look at the cost). What’s more, those clients will believe you provide that value you speak about – because you charge a reasonable price for it accordingly.


If your MSP or IT Solution Provider keeps losing business to competitors and the post-sales feedback you’re getting from clients is that they’re working with somebody cheaper – then your instinct may be to lower your prices accordingly.

But if you’re talking to prospective clients about providing great value and the price of your service seems too good to be true, then please understand that many of clients who are looking for great service may themselves believe you are unable to actually provide it!

So rather than blindly competing on price – a race to the bottom that you’ll never win – consider raising your prices. Doing so will help you attract the type of client who shop based on value, the type of client your high quality service is suited for.

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