This post could just as easily have been titled Arnie Bellini of Connectwise is right: Most IT service providers SUCK at business!
I don’t mean to come across as a jerk, but it is so frustrating to find verified proof that our industry is constantly shooting itself in the foot with aggressive competitive discounting of service prices.
A just-released pricing benchmarking report from RainToday.com, a publisher of sales and marketing strategies for professional services firms, shows that of all of the professions they studied, IT service providers were:
- Most likely to feel presssure to compete on prices due to aggressive pricing and tactics from competition
- Most likely to feel pressure to compete on prices from prospects and clients (gee…I wonder why, given point #1 above!)
- Most likely to discount, with the average discount being 11.7% of fees
11.7%?! Most companies don’t even make a profit of 11.7%!
What’s the solution? Start treating what you do as a profession of value, and not as a commoditized trade. Start having confidence. Take some courses in how to sell value instead of price. Get some guts and work on some creative and firm responses to prospects that ask for discounts.
Whatever you do, get it through your head that if you continue discounting your prices, you are in the a race to the bottom of the field and an unprofitable business.
MRC
