You Need to Charge Enough to Do a Great Job

Pricing is one of the most important decisions any business can make. From what I’ve seen, it is also often misunderstood and quietly sabotaged by insecurity.

In my experience, too many companies simply set their pricing based on what everyone else is charging – “the market price”. I get the logic, but it’s a serious limiter or even a killer if you’re in an immature market where many are undercharging – the classic “blind leading the blind”.

I’ve certainly seen plenty of underpriced MSPs. Service Leadership, a well-known benchmarking group in our industry, often reports that around a quarter of IT providers lose money every year and many more are barely scraping by.

It’s a sobering reflection of how hard it is to charge enough in an industry that doesn’t know what “enough” really looks like.

I suspect this mispricing is probably the norm in many industries. Pricing is hard and charging enough can feel wrong. Insecurity plays a role (we’re our own worst critics). Some business owners lack sales skills or capacity, so they take the path of least resistance: low prices. Others simply don’t know how to price – they’re great technicians, but not yet great business people.

There’s plenty of advice on pricing strategy, but it starts with one thing: knowing your numbers. Know your true costs—variable, fixed, gross margin, overhead—all of it. Model your business honestly, ensuring you’re building something that can survive and thrive long term. You also want to consider the value you provide your clients – what problems are you solving for your customers and what do those problems cost them: consider value-based pricing, instead of just a “cost plus” approach. Of course, know the market as well, but position yourself appropriately (yep, you need good marketing and sales). And is your pricing enabling you to grow and profit enough to perpetuate what you’re building – the real test?

I talk to many prospective clients who are frustrated with an IT company who, to my eye, is simply charging too little to deliver what they promised. These are almost always well-intentioned people, trying to do the improbable. And while it can sound self-serving to point it out, the truth is simple: pricing fairly isn’t about squeezing profits. It’s about caring enough to deliver sustainably.

I heard a great line once that stuck with me:

“We care too much about our clients to not charge enough.”

That’s it. That’s the mindset.

What’s this 25/25 stuff about?: 25 YEARS, 25 INSIGHTS – Reflections on Growth, Leadership and Resilience | Smart Dolphins IT Solutions Inc.