Does your MSP keep losing business on price?

As a follow-up, my friend Mark Williams at Pensar IT shared a great blog post on the "Common Law of Business of Business Balance" (http://www.pensar.co.uk/clbb/) that says:- “There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

Interesting topic. Six months ago we quoted to support a local business and lost out to a lower-priced competitor. The client has since called us and has arranged to move to us once their contract expires. They went through the Cyber Essentials process and found out patching wasn’t getting done. They were also up sold lots of technology after signing the agreement. Sometimes these customers will come back to you.

Jonathan -- thanks for the feedback. This isn't at all unusual. The old adage "You get what you pay for" often rings true! I'd recommend any MSP stays in touch with prospects they lose to on price. Stay proud of the value you offer, even if you're more expensive!

Good article Richard. How do you fight the value add proposition though, when your competitors are all probably saying the same thing about their value ie. better SLA's and promising great uptime etc too. I guess the prospective client isn't going to know or experience the competitions value until they sign up and experience first hand and then realise that it wasn't what they thought it was going to be ie. failing SLA's, taking a long time to fix issues, poor responses o support tickets etc. Some competitors even give their new client all the love and even get some initial project work out of the new client for the first month or two and then let things slide after that. The client is then burnt, decides top leave if they can escape the contract terms and then potential comes back you. Do you take that client who initially went for someone else based on cost alone? Lucky enough we haven't experienced this situation as the majority our clients come from WOM and we are able to keep the costs consistent in most cases, but we have had the odd competitor try on some clients, but because they prefer our service they are happy to stay and pay our prices. The ones that don't want to pay, we just let them go because as you say they are never going to appreciate the value we offer to them.

Great question, Jack. In terms of finding clients, social proof (such as testimonials and videos from your existing clients) goes a long way towards establishing credibility. It's one thing for you to say how great you are, it's another for someone else to sing your praises! In terms of prospects who shop on price alone -- I'd avoid them, but absolutely stay in touch with them. Make it clear you're not the cheapest. Let them work with the cheapest. Stay in touch with them as they work with the cheapest. Then, when they want to move to a more mature, sustainable MSP, they'll be in touch with you.

[…] that they know what they’re doing. There is such thing as being “reassuringly expensive!” Richard Tubb even recommends that you try raising your prices if you notice that you’re being undercut on price in post-sales […]