The more confident and comfortable you are talking about price, the less fee resistance you'll get. Bring up price three times: in the initial conversation (only for small prospects who aren't already paying for managed services, and only after your diagnostic questions), in the discovery meeting once you understand what they need, and at the start of the closing meeting, so there is no sticker shock. When you present the numbers, reframe the cost against industry norms for IT spending, remind them of the losses they've already had and point out where you'll save them money.
Nothing strikes fear into the heart of most salespeople more than the dreaded MONEY TALK. More specifically, the conversation about what you charge. In general, here's a really important point: The more confident and comfortable you are talking about the price, the less fee resistance you'll get.
Just as dogs "smell" fear, prospects sense unease in salespeople and misinterpret it as lying or hiding something, which causes them to lose trust and not buy. So, one of the first things you gotta get right with is charging sufficient fees to make the profits you need (and want).
Assuming you're targeting right-fit prospects who don't use price as their #1 criteria for buying IT services AND you are comfortable in your own skin talking about your fees, let me give you some tactical strategies for how to overcome fee resistance and not waste time on prospects who are myopically focused on getting "cheap" IT support.
The money talk is step 6 of the seven steps to close an MSP sale. Here are the three times it happens.
1. The Initial Conversation (Small Prospects Only)
The first time you need to introduce a price conversation is early on in the sales process. If you get an inbound lead that is a small business, say under 10 employees, you might want to raise the price issue early on before you move to a discovery meeting. But be careful here. If you start talking about price before you've asked any good diagnostic questions or have taken time to understand who they are and what they're looking for, you'll scare a bunch of people off.
What To Ask First
So, in the initial conversation, ask these questions IN ADDITION to the good discovery questions you should already know to ask:
- Who currently does your IT?
- Why are you looking to switch IT companies? Where are they failing you?
- And what's your arrangement with them? Are you on a contract for recurring monthly services or some other plan?
- Is there a contract in place? If yes, when does it expire? Are you allowed to cancel it and bring someone else in?
When To Float Price, And When Not To
If they are outsourcing to a competitor but have no contract, are not paying for managed services AND are small (under 10 employees), you might want to float price. I would do this ONLY after the diagnostic and above questions are asked. I would also not suggest you start talking price IF the prospect is outsourcing to another MSP and is paying for managed services. You'll bring it up later in the full discovery meeting.
What To Say
But if they're small and you sense they won't be able to afford or be willing to pay for managed services, you will want to say something like this:
"Well, XXX, we certainly can help you fix those problems and we'd love the opportunity to work with you. But one thing that may be an issue for you is that we only take clients on what's called a 'managed services' agreement, where we provide basic, ongoing services and support to your organization for a set fee, in addition to any project you might have us do. In other words, we don't take clients on a 'call us when you need us' basis when something breaks because it's not what's best for you in protecting your organization from data loss, downtime and cyberattacks, and it's not the best way for us to provide really awesome support, so 100% of our clients are on some type of plan like this. I can't say what it would cost you exactly, but a company of your size would be in the $110 to $160 range per employee for managed support. Does that work for you or is that completely unreasonable for your business?"
If they are NOT open to the idea, you probably want to NOT go and meet with them but instead recommend a few other smaller competitors who will take them on as a break-fix client. If they are open to the idea, move ahead with the discovery meeting.
2. The Discovery Meeting
The next time you are going to bring up price is in the discovery meeting AFTER you've got a clear handle on what they want, what their problems are and what they need. The talk track is very similar to the above. If they are just not willing to pay those fees or if they only want break-fix, move on.
3. The Closing Meeting
The final time you'll discuss price is at the closing meeting. If you've already floated price, there should be no sticker shock, and it should be a very comfortable and normal conversation. (This is one reason the preparation you do before the presentation matters so much.) You could mention it at the opening by saying something like this to alleviate the pressure of them wanting to get right to what it costs:
"Before we get started, I know you're probably wondering what the heck this is going to cost…and if you remember in our last meeting, I shared with you that a typical client of your size is going to run somewhere between $X and $Y. Good news is that we came in right in that range, and our proposed budget is $Z with a small budget of $ZZ, which is in line with what we thought. I'll get into this in more detail because we have a few options for you to decide on that will determine the final budget. But the good news is that we're right on target."
The rest of the sales presentation should build the pain, sell you and the solution and then ask for the order. When you are showing them your plan(s), you will also be talking through the price. Remember, buyers don't think you are going to work for free, so they expect you to charge money…and sellers (you) have far more emotional hang-ups about price than the buyers.
5 Pointers For The Money Talk
Here are a few additional pointers to keep in mind when having the money talk:
1. Reframe the cost. Reframe the cost to be EXTREMELY reasonable even if they're going to spend more than what they are spending now. For example, start by explaining "industry norms" for IT budgets. Here's an example of what you might say:
"A company of your size should be spending somewhere around 4% of topline revenue for IT expenses. You're currently only investing 1%, which is one of the reasons you're having so many problems. The other reason you're having so many problems is that your current IT company is failing to do X, Y and Z for you, which is putting you at risk for a serious outage or ransomware attack, which would be a very expensive and disruptive disaster you want to avoid at all costs."
2. Remind them of their losses. Remind them of any LOSSES (ransomware costs, downtime, lost sales, inability to fulfill on client projects, etc.) they've already incurred (and told you about) from not having adequate IT.
3. Show where you'll save them money. If appropriate, point out the ways you will SAVE them money (lower insurance premiums, moving to the cloud, eliminating unnecessary tech like Slack/Zoom/file-sharing by moving to Teams, reducing downtime, etc.).
4. Address cheaper quotes. Point out that there may be CHEAPER quotes, but they likely don't have X, Y and Z, which the prospect NEEDS and shouldn't be left out.
5. Check in. Does this make sense? Does any of this concern you? Not work for you?
The Bottom Line
Many of the vendors publish industry reports on price, so make sure you stay up-to-date on what the "average" MSP is charging out there. Reasonable people understand you get what you pay for, so don't back off a higher price just because you're getting some fee resistance.
Lean in.
If you want help building your money talk and the sales presentation around it, that is exactly what my MSP sales training is built for.
Frequently Asked Questions
When should you bring up price in an MSP sale?
At three points. In the initial conversation, but only with small prospects (under 10 employees) who aren't already paying for managed services, and only after you've asked diagnostic questions. In the discovery meeting, once you understand what they want and need. And at the start of the closing meeting, so the prospect isn't waiting through the whole presentation wondering what it costs.
Should I mention price on the first call with a prospect?
Only in specific cases. If the prospect is small, is outsourcing IT with no contract and isn't paying for managed services, float a price range after you've asked your diagnostic questions. If they're already paying another MSP for managed services, hold off and bring it up in the full discovery meeting. Talking price before you understand who they are and what they need will scare a lot of people off.
How much do MSPs charge per user for managed services?
In my example script for a small business under 10 employees, a company that size would be in the $110 to $160 range per employee for managed support. Vendors publish industry reports on pricing, so stay up to date on what the average MSP is charging, and don't back off a higher price just because you get some fee resistance.
Should I bring up price at the start of the closing meeting?
Yes. Mentioning it at the opening relieves the pressure of the prospect wanting to get right to what it costs. Remind them of the range you shared in the last meeting, tell them the proposed budget came in on target, and explain you'll walk through the options that determine the final budget. If you've already floated price, there should be no sticker shock.
How much should a small business spend on IT?
My reframing script uses an industry norm of around 4% of topline revenue for IT expenses. Comparing that to what a prospect currently invests, for example 1%, helps explain why they're having so many problems and makes your fee look reasonable even if it's more than they spend now.
Why do prospects push back on MSP pricing?
Often because the seller is uncomfortable. Prospects sense unease in salespeople and misinterpret it as lying or hiding something, which causes them to lose trust. Buyers expect you to charge money. Sellers have far more emotional hang-ups about price than buyers do, and the more confident you are talking about price, the less fee resistance you'll get.
What if a prospect only wants break-fix IT support?
Move on. If a small prospect isn't open to a managed services agreement, don't go meet with them. Recommend a few smaller competitors who will take them on as a break-fix client. If a prospect in the discovery meeting isn't willing to pay your fees or only wants break-fix, the same applies.