VARs Tread Carefully on Raising Service Prices - Treading Lightly
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"We have not raised prices in the last year plus," says Steve
Alexander, president of Third Eye Technologies. "We never polled our
clients; however, there have been enough clients contacting us in regards to
cutting back on our services that it just didn't seem like a good idea.
"The good news is that the result has been an excellent retention rate and
overall growth of 10 percent each of the last two years in our monthly
recurring revenue," he adds.
MJ Shoer, president of Jenaly Technology Group, tells Channel Insider that he's
not afraid to raise prices, "providing we are delivering a corresponding
value."
Shoer says he believes that in the IT solution provider industry there is a
reluctance to raise prices during down years that leads to bigger price
increases after a recovery. That's a mistake, according to Shoer.
"A client once said to me he would much rather pay a 3 percent increase
every year than a large increase every two or more years," he says. "In
any services business, if you are delivering value, it should always exceed, at
some level, the price that you charge and, therefore, there should be no
concern with raising that price."
His company is building an "up to 5 percent" annual increase into all
its agreements, he says.
"That way we may or may not raise our prices on an annual basis, but at
least we have the capability to and by a reasonable amount."
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