By: Zach Wilcox on July 11th, 2022
When in the Sales Process to Talk Pricing - Qualification or Proposal?
A topic that comes up often in discussions with MSPs is when to "talk price" with prospective clients. There isn’t a perfect time in the sales motion to bring up costs for everyone. However, in this blog, we will compare the pros and cons of different approaches so you can determine what the best option for your business is.
In a perfect world, every IT prospect we engage with has a few pain points and we have the perfect remedy to those ailments in our tech stack. We present our solution to take them to IT Shangri-La and they are ready to move forward with our MSP. Unfortunately, we don't live in a perfect world, and price is a large factor for prospects in their Managed IT decision-making process. There are two primary schools of thought on when to bring up price:
- Bring up price during the initial qualification stage of the sales process
- Save the pricing conversation for the last portion of the sales process
Let's take a closer look and evaluate them both.
Bring up Price During the Initial Qualification Stage
The first approach is to bring up price during the initial qualification stage of the sales motion. How often has your MSP done a discovery with a prospect, put together the perfect solution based on their needs and environment, built up the excitement around the solution, and then given them the monthly cost as the grand finale, only to hear "Four thousand dollars?! I thought this would be three hundred dollars a month!?" You could sell the value of a Lamborghini to me until I'm a raving fan and must have it, but no matter how perfectly that supercar fits my needs I can promise you there's no room in my budget for a monthly car payment that high.
By bringing up a general ballpark cost during the initial conversation, you're able to quickly gauge if the prospect has realistic expectations on what their IT budget is (or discover they don't have any budget at all). Uncovering that there's a mismatch on financial expectations up front can save your team from spending time and resources on a prospect that won't ever commit to the financial investment needed to become a client.
This approach is a good fit for: Prospects under 25 users. The smaller the business, the less likely it is they'll have a dedicated IT budget. So, having an initial pricing discussion with that 7-user HVAC company before doing a full day of onsite discovery work can be a time-saver. This is also a good fit for MSPs who don't charge for their discovery. If you aren't recouping your labor expenses that go into the proposal pre-work, it's important to make sure they understand what they should expect to pay for your ongoing IT management.
Save the Pricing Conversation for Last
The alternative approach is to save the pricing conversation for the last portion of the sales process. You may read the first part and say "Zach, how can you give a prospective client an idea of what their monthly costs are before you know what they need? Of course, they don't see the value in my solution yet, I haven't shown them the IT Shangri-La I'm building for them!" These are both valid points, and the main argument in favor of saving pricing for later.
If you knocked on someone’s door and told them they needed a new roof for $25,000 they most likely won’t be interested and will need more context. If you showed someone pictures of their roof where the shingles are missing and identified the places where water will start dripping into their bedroom during the next heavy rain, I will look at that $25,000 roof quote much more seriously. This is the same story in Managed IT. Most prospective decision makers are non-technical folk who don't know what they don't know, so they don't value your services appropriately. By taking your technical findings and pain points from the discovery and using that to tell the story of the non-technical implications to their business, you're framing the monthly cost as an investment in their business rather than another drain on their revenue.
This approach is a good fit for: MSPs who work with larger organizations, where a one-size-fits-most solution isn't viable. Co-managed opportunities and businesses over 50 users will have complexities not found in smaller prospects, so talking price up front may eliminate prospects that are a perfect fit. This is also a good approach for MSPs who charge one-time assessment fees, since a willingness to pay for an assessment signals that they value their security and IT Management enough to review it at the very least.
Pricing is a large factor at the beginning of any relationship with a client. You haven’t yet had the chance to prove to them that you can make their life easier. Because of this, timing is crucial to the success of obtaining that client. Use this method to assess when the right time to talk about pricing is for your next prospective client.
We use a hands-on approach to understand your challenges, identify opportunities, and provide the right solutions to grow your managed IT services business - quickly. To learn more about how Collabrance can support your sales process and beyond, contact us today!