Ask Intronis: How to transition my SMB customers to fixed pricing

Posted by Courtney Steinkrauss on Feb 16, 2015 9:00:00 AM

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AskIntronis_LogoQ: I want to switch my customers to a fixed price plan, but I'm not sure where to get started. They’re all used to paying per gigabyte, so I'm afraid they won't want to change. How should I set up the new pricing? When should I break the news, and what should I say? 

Be patient, and don’t rush the change. Customers get comfortable with the way things are, so it can take a little handholding to get them to embrace a new approach. You also shouldn’t feel like you have to switch every customer over to a different plan all at once. Take your time and plan out how and when you’ll approach each of your customers.

14859431605_1fcfc06f74_zWe talked to Jasmine Lombardi, vice president of Partner Success at Intronis, to get her advice on how to bring the topic up with customers and successfully make the transition.

1. Customize your margins.
Charging your customers a flat rate for cloud services each month gives you the freedom to develop more customized margins, depending on the level of service each customer needs. Before approaching any of your customers, decide what approach you’re going to take to pricing.
 
Don’t limit yourself to just charging one flat fee. Consider other pricing models such as pricing per device or creating bundled service plans. When I talk to Intronis Partners who are making this kind of transition, I like to point them to our Pricing Data Protection in a Fixed Price World ebook. It walks you through a number of these options in more detail so you can decide what will work best for you and your customers.
 
2. Educate your customers.
Try to use the conversation as a chance to remind SMB customers why cloud backup and disaster recovery is such an important service and emphasize the value it brings to their business. Remember, they don’t want to get caught in a situation where they lose data. I like to put it this way: It’s not an optional service if they want to stay in business.
 
3. Stress the benefits of more predictable costs.
When you talk to your customers about your new approach to pricing, be sure to play up the ways it will help them and make their lives easier. Whether you structure it as a flat monthly fee, a per machine charge, or a bundled package, fixed pricing takes away the element of surprise from their monthly bill and helps customers project costs and plan ahead more easily. I think this is the argument that really hits home for customers the most.
 
4. Use it as an opportunity to convert break/fix customers.
I’ve seen a lot of MSPs who like to pitch customers who aren’t under contract as soon as possible after switching to a fixed price model. Backup is a recurring service, so it can be a great way to get your break/fix customers on a recurring revenue stream.
 
5. Wait until contracts are up for renewal.
MSPs will also have a pool of customers who are under contract or tied to another provider. Depending on how your contract or their agreement with the other provider is structured, you’ll most likely need to wait until they’re up for renewal. Mark it on your calendar so you can start the conversation ahead of time and make sure they’re ready for the change.

How would you approach a change like this? Have you made the transition to charging customers a fixed price? If so, how did you handle it? Leave a comment to share your insights, and let us know what you think.

Ask Intronis is a weekly advice column answering common questions from MSPs and IT service providers. It covers topics ranging from pricing and selling to marketing and communications—and everything in between. Submit your questions by emailing AskIntronis@intronis.com.

Photo Credit: Robert Couse-Baker on Flickr.com. Used under CC 2.0 License.

E-book: Pricing Data Protection in a Fixed-Price World

 

Topics: Selling Cloud Backup, Customer Management, Ask Intronis

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