Talking about raising prices can send a shiver down any MSP owner’s spine. It’s like walking a tightrope –  on one side, you’ve got the fear of customers bolting for the exit, and on the other, the undeniable need to boost your bottom line. 

As uncomfortable as it may be, raising your prices is often a necessity, not a choice. Whether it’s due to inflation, increased supplier costs, or simply the need to keep your service quality top-notch and keep your business healthy, sometimes the numbers need to go up to keep the lights on and the service exceptional. 

It’s not just about making more money; it’s about sustaining the quality and value that your customers have come to expect. And in the long run, that’s beneficial for everyone involved.

Of course, you can’t expect your customers to pay more unless you are delivering the value they want and need – and unless you can skillfully articulate that value – but that’s a separate topic and we’ll assume you have that nailed.

Why Should You Raise Your Price?

First things first: why are we even considering this? The answer is simpler than you might think. It’s all about survival and growth. With costs creeping up and competitors not sitting still, adjusting your pricing isn’t just a good move—it’s essential. 

A small price increase of just 5% can lead to a significant jump in your profitability, especially when these extra gross profit dollars fall to the bottom line. 

See The Risks Clearly

The fear of losing customers is real. It’s the monster under the bed for every business owner. But let’s turn on the light. Have you actually quantified the risks of losing customers? When the dust settles, you’re probably going to keep all of the customers who appreciate the value you deliver and if you lose any, they are likely to be the ones who you don’t really like to serve in the first place.

So, if you handle price increases thoughtfully, you won’t just keep most of your customers, you might even see them respecting you more for it. The right customers understand that quality comes at a price, and those who truly value what you offer are more likely to stick around.

But, let’s see what would really happen if you raise prices and lost some percentage of your customers.  Here’s a screenshot of our Price Increase Risk Analyzer illustrating the consequences:

If you do the math, look what happens… 

In this scenario, if your 5% price increase caused 9% of your customers to head for the exit, you would not lose any gross profit dollars! 

Same gross profit, but fewer customers – is that such a bad thing? (if you want the Price Increase Risk Analyzer spreadsheet, just send me a message, it’s a simple Excel calculator designed to show the financial impact of price increases. It allows you to play around with numbers, see potential outcomes, and make decisions based on data, not just gut feelings.)

Feel The Fear and Do It Anyway

When you think about price increases, emotions might get in the way of good judgment. But remember, it’s all about how you handle the communication and implementation. 

Done right, it’s less about losing customers and more about securing your business’s future. Your honesty and transparency will not go unnoticed, and the trust you build through this process is priceless.

So, take a deep breath, plan your strategy, and raise those prices confidently. Your business isn’t just surviving; it’s thriving, and your customers are right there with you.