MSP Customer Conversations: Navigating SaaS Price Discussions

By Sam Gutmann 2

managed services pricing

In our most recent webcast with The VAR Guy, Pat Osigian of Networking Results (an Intronis partner) said that a customer’s true objection “is never about price.”

How right he is. As long as your prospect believes in the value of what you’re offering, price will not be an issue. Prospects who repeatedly ask about price are fundamentally misunderstanding what your business offers. And the discussion keeps coming back to price because that is something they understand concretely.

It’s not about price. Really.

There will always be someone who is cheaper. Do not commoditize your business—more than likely, you will lose that battle. The way to deflect price conversations is to make your value proposition compelling, relevant, and urgent. That’s not to say you can charge whatever you want. It is important to stay within range of your industry. But that doesn’t mean you have to be (or should be) the cheapest option.

I see it all the time in my own business. Intronis signs up dozens of partners every month who initially went with the cheapest online backup solution available. They only realized later on that the cheapest option wasn’t worth what they paid for it.

In the reseller space, we’ve discovered that our most successful partners are hyper-conscious of the client perspective.  When consulting their clients, these partners focus on the benefits and results of what they offer—not software features.

These partners have learned that empathy is the best weapon in their sales arsenal. They relate to their clients from the clients’ perspective, not from their own.

Understand your clients’ motivation

Ever hear the proverb, “First seek to understand, then to be understood”? If you follow that advice, you will quickly find out what motivates your clients. Then you can tailor your value proposition accordingly.

It’s no secret that consumer sales thrives on emotion. When was the last time you saw an ad that didn’t try to appeal to your sense of pride or tried to invoke jealousy or lust? Though the B2B sales process probably won’t cover all seven deadly sins, don’t mistake it as an emotionless process.

IT resellers and managed service providers can best utilize the emotions of greed and fear to underscore the value that their services add to their clients’ businesses. That might look harsh in black and white, but the reality is this: your clients will not buy your services unless they understand why they need them. For end users, that usually means the product or service has to help them make more money or protect what money they have.

Point out the problem

Moreover, your clients are not going to think they need your services unless you make it explicit that they do. Basically, your first step is to point out a problem.

In Intronis’ business—online backup and recovery—the best way to resell to end users is to first point out risk and then offer a solution to mitigate that risk. It’s just a cold, hard fact that data is one of the most valuable assets (if not the most valuable) of any company. What would you do without your list of email contacts? Your client records? Your sales transactions?

And there have been many examples of businesses—both large and small—losing everything and going bankrupt because they either didn’t backup their data or the solution they used failed.

Offer a solution to the problem

If you were to ask your clients, “How much is your data worth to you?” the answer would sound a lot like a MasterCard commercial: priceless. If something is really that valuable, isn’t it worth $50, $100, $200 per month to insure that you will always have your data whenever you need it regardless of a natural disaster, terrorist attack, or equipment failure?

See what I just did? Once you establish need and value, price is tertiary. As long as you can speak your clients’ language and truly add value to their businesses, your price discussions will simply become that—a quick conversation—instead of a battle.

Sam Gutmann is president and CEO of Intronis. Find Intronis partner program information here. Guest blog entries such as this one are contributed on a monthly basis as part of MSPmentor’s 2010 Platinum sponsorship. Find all of Sam’s guest blogs here.