Focus on the Value, Not the Price of Your Managed Services Solution

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Feb 14, 2017

Cost Justification Strategy for Managed IT Services: When, How, and Why

Managed Services Solutions: Cost vs Value

Get in the mindset that you will always be the most expensive managed services solution. You may be contemplating, “If we cost more than our competitors, how could we possibly win the sales?” The answer: A proper cost justification strategy.

“Cost justification,” why does that sound familiar? It’s one of the CharTec 5 prerequisites of a sale! But how do you develop this? Better yet, when do you develop this? And why is this so important in the sales process?

WHEN

The discovery phase of the sales cycle is broken into two parts: the technical assessment and the business implications. Setting aside the technical portion, your sales focus is to sit down with your prospect decision makers and key employees. During these conversations you should walk through a pre-determined set of strategic business questions aimed at identifying your prospect’s pain points, waste, and excessive spending. With each engagement you’re able to dig a little deeper until you’re capable of quantifying your prospect’s answers in a form of currency, time, or money. The result of these uncovered costs will allow you to close the sale.

HOW

Follow these 3 steps to justify the cost of your managed services solution:

  1. Determine the company’s annual revenue, number of employees and average employee salary. This will allow you to…(fill in the gaps)
  2. Quantify pain and waste to excessive spending. (Example; Mary the office manager spends 2 hours per week managing vendor relationships. Whenever there is an issue with their internet she is calling the ISP. This consumes 2 hours of her time per week. This results in (do the math).
  3. Use factual information stated by the prospect. Value is perceived through the customer’s eyes. You need factual information shared by the prospect that can stand alone during the presentation. Presenting with assumptions is the quickest way to lose your credibility.

Repeat this process of revealing latent needs uncovered during the discovery process until you have built a case of apparent need. At this moment, the prospect will realize there’s area for significant improvement. An opportunity for you to present your carefully crafted solution by a team of experts that will conveniently alleviate ALL the issues you uncovered and justify your cost.

WHY

Cost justification is the ability to prove that even though your managed services solution may appear to be more expensive than competitors, your cost is easily justified because of the significant amount of issues and areas for improvement you uncovered during the discovery. If you win on price, you will lose on price. Instead of focusing on always being the lowest bid, focus on the value you can bring to your prospects and customers to close more sales and build long-term relationships.

While there are many objections you can prepare for, price will always be the common denominator. Something many of us in sales fear, right? Wrong! We look forward to discussing price because of all the pre-work we’ve done. With each latent need and issue uncovered, you also gain agreement in its associated cost. These costs add up to a total of… x!

“Going forward Mr./Mrs. Business Owner, our solution will cost x. That’s a cost savings of x to you!”



Category: Sales

About The Author

Jake Wagner

Jake Wagner, an Account Manager for Collabrance, is responsible for sharing, coaching, and training partners on Managed Services best practices. Jake is a great resource providing value to help partners achieve greater success in their business. Jake graduated from the University of Dubuque with a bachelor’s degree in Business Marketing.