Treading Lightly

By Jessica Davis  |  Print this article Print

After cutting IT budgets back to the bone over the last few years and negotiating prices way down during the recession, is it time for IT solution providers and resellers to look at raising services prices again? Here's what those in the trenches say.

"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."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com