My New Company - Dara IT
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When I looked at the reasons for not disclosing pricing, I looked a bit broader at other industries and sectors, the trend/pattern seems to be.
For a bespoke service, it's impossible to quote outright (ala web design, graphic design, architecture)
For a commodity service, Costs should be fixed and controllable (Internet, email, Stationary printing)
Here's one article that sums up nicely why I'm looking to show-case pricing first
http://www.socialmediaexaminer.com/5-reasons-your-content-marketing-must-address-price/ -
That being said, time will simply tell if I have gambled correctly, I agree it's going against the grain of what usually happens though.
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@Breffni-Potter said:
When I looked at the reasons for not disclosing pricing, I looked a bit broader at other industries and sectors, the trend/pattern seems to be.
For a bespoke service, it's impossible to quote outright (ala web design, graphic design, architecture)
For a commodity service, Costs should be fixed and controllable (Internet, email, Stationary printing)
Here's one article that sums up nicely why I'm looking to show-case pricing first
http://www.socialmediaexaminer.com/5-reasons-your-content-marketing-must-address-price/these are the reason why we thought this. As a bespoke service, quoting pricing is dangerous.
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Not really going against the grain, tons and tons of MSP model firms go for fixed pricing. They do so by enforcing rigid standards on customers.
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@scottalanmiller said:
these are the reason why we thought this. As a bespoke service, quoting pricing is dangerous.
I agree. Keeping the bespoke items unquote able
http://darait.co.uk/special-projects/.
@scottalanmiller said:
Not really going against the grain, tons and tons of MSP model firms go for fixed pricing. They do so by enforcing rigid standards on customers.
I'm trying to have the conversation about price first and get it out of the way, then we can focus on how we add value rather than finding a lead, beginning the process and then "Oh...that much? Ok not interested"
More and more people want to find out the price of a service quickly, they don't want to dance around the traditional wait for a sales-man to sell you the moon.
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That kind of makes sense, but it seems like with a bespoke service that you either are stuck printing low prices and then surprising people with high ones or listing high prices and never getting to have the conversation of what the price should be.
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I guess I view the support as more of a commodity. Rather than bespoke, Conversely if someone wants an out of scope support package, the conversation will be had then.
Still...Can't believe we missed the Exchange logo. I guess too much time getting caught up in other areas that we lost the plot on that.
How embarrassing, I've got a stack of business cards with the logo nice and large. Imagine walking up to the Microsoft rep at Spiceworld this week with that, best troll ever.
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@Breffni-Potter said:
I guess I view the support as more of a commodity. Rather than bespoke, Conversely if someone wants an out of scope support package, the conversation will be had then.
We very specifically do not reference ourselves as a MSP. We open conversations with prospective clients that we are not the cheapest per hour. Ever.
We also refuse to sell blocks of time per month or such. That will only ever come back to bite someone in the ass. Either you will lose because extra problems occurred and fall under the scope of work, or, more likely, the client will lose because you did not perform X hours of work in the month and they still paid for it.
We bill by hour period. We tell our client, there will never be a month with no work as everything needs checked occasionally, but if nothing is wrong, that will be minimal time.
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@Breffni-Potter said:
I guess I view the support as more of a commodity. Rather than bespoke, Conversely if someone wants an out of scope support package, the conversation will be had then.
I think a B2B IT company shouldn't see it self as commodity, if people want commodity they go to geeksquad, staples etc. you shouldn't try to compete with them.
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@thecreativeone91 said:
@Breffni-Potter said:
I guess I view the support as more of a commodity. Rather than bespoke, Conversely if someone wants an out of scope support package, the conversation will be had then.
I think a B2B IT company shouldn't see it self as commodity, if people want commodity they go to geeksquad, staples etc. you shouldn't try to compete with them.
Exactly. And... they would say the same thing about the site, right? They would say "a company providing bespoke support wouldn't publish prices because we aren't looking for GeekSquad type support". Look at it from their perspective, reading your price list makes it feel like GeekSquad is exactly your competition. So the customers you feel will understand these aren't the real prices, are the very ones that I think will avoid you because of the set prices.
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@Breffni-Potter said:
I guess I view the support as more of a commodity.
Bench support (GeekSquad) IS a commodity. But IT services are not. If your goal is bench work (fixing failed drives, antivirus installs, OS installs, "bring your desktop to us") then yes, commodity it is.
If you want to offer IT advice, speak at a business lever or do non-commodity services (i.e. do IT consulting) then you can't be commodity.
The MSP model works to take IT services and move them into commodity by defining a "cookie cutter" approach and forcing businesses to adapt so that prices can be estimated accurately.
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Although I think maybe the goal is bench support, not IT consulting or MSP work. From reading the site, I did not get the impression that the goal was to provide IT services. But to directly compete against GeekSquad where all of the "unknown costs" happen on the business side and the costs from the vendor are basically set.
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One of the things to keep in mind is that bench services is able to be set prices by having strict caps and contract limits and enormous margins so that they can absorb a lot of mistakes. Normally they rely on being a loss leader for sales, as well. Look at GeekSquad or Staples, their bench services are only there to improve sales. You need the sales to make it make sense.
IT departments, even internal ones with crazy amount of control, can't have set prices. There are just so many variables. You can work to be predictable, but getting a set price for internal IT is really not something that you can do.
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Right, no more stolen logo. if the site has not yet changed for you then you might need to clear cache. Brochure has been yanked for now, to be updated.
Interesting to have a few fresh set of eyes over the whole piece.
I guess I'm influenced more from live events.
You can hire a projector from anyone, but the quality of the engineer to set it up and operate it will be different depending on where you go. All of them disclose pricing for the bread and butter, hire our kit, basic bench work but anything custom is quotable.@thecreativeone91 said:
I think a B2B IT company shouldn't see it self as commodity, if people want commodity they go to geeksquad, staples etc. you shouldn't try to compete with them.
B2B and consumer to start with. The UK price for comparison is 3x what geeksquad charge, too many people have been burnt by that level of service. I guess you'd compare it with a two star hotel trying to compete with a 4 star hotel, both of them are hotels but you get a different experience.
@scottalanmiller said:
Although I think maybe the goal is bench support, not IT consulting or MSP work. From reading the site, I did not get the impression that the goal was to provide IT services.
Bench Support is a starting point yes. Are the other aspects not presented well enough? Auditing/Project work? Spent quite a bit of time on the lay-out so that all 3 areas were clear.
@JaredBusch said:
We very specifically do not reference ourselves as a MSP.
Unless I'm badly mistaken, I've been careful not to say that anywhere.
@JaredBusch said:
We bill by hour period. We tell our client, there will never be a month with no work as everything needs checked occasionally, but if nothing is wrong, that will be minimal time.
I might say that then it places the client in a very disadvantaged position. Let me play this out hypothetically.
Apart from trusting that you will do the right thing by them, there is no motivation for you to prevent issues happening to them down the line as that is hourly work you will want to bill for, if bad things don't happen, revenue vanishes.
Not accusing you of anything, just spinning the other side of the coin.Where as with this model, it is in my interest to prevent issues/problems, If a client is stable and happy across a year, that's a years worth of revenue as my incentive plus by preventing issues, I get an easier life. You cannot prevent 100% of problems but there is a lot of work you can do.
Having said that, I agree with blocks of time to a point, If you've commissioned a whole new server/network, then surely you would want to mark a separate pool of billable hours for "snagging" - Which if they don't use is refunded to them but they've been up front and agreed it.
@scottalanmiller said:
Normally they rely on being a loss leader for sales, as well. Look at GeekSquad or Staples, their bench services are only there to improve sales. You need the sales to make it make sense.
Don't intend it to be a loss but it certainly is meant as a means of beginning to establish trust, The most powerful advertising tool I have ever seen is word of mouth recommendation, If we deliver a service that is.
- On time
- On budget
- Trustworthy
- High Standard
With the small stuff, you are more likely to take the risk on larger projects.
There may come a time when the bench side is dropped completely, I've done some number crunching and although the numbers are not massive, they are enough to justify offering it to those who need it, especially when you already have a pool of clients.
Really grateful for the points raised/feedback. Would be pleased to hear more.
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@Breffni-Potter said:
B2B and consumer to start with. The UK price for comparison is 3x what geeksquad charge, too many people have been burnt by that level of service. I guess you'd compare it with a two star hotel trying to compete with a 4 star hotel, both of them are hotels but you get a different experience.
Wow, it is less than GS charges here. GS is like $120/hr.
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@Breffni-Potter said:
Don't intend it to be a loss but it certainly is meant as a means of beginning to establish trust, The most powerful advertising tool I have ever seen is word of mouth recommendation, If we deliver a service that is.
That's not how business IT works. Here are a few thoughts on this:
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Word of mouth pretty much does not exist in business. It just doesn't, especially around IT services. There are tons of reasons that we assume around this, but the reality is if a customer loves us or hates us, they tell no one. We've had customers for over a decade that could not live without us and love us to bits but..... have never discussed us a single time. Companies don't talk about their IT providers, they just don't.
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Establishing trust doesn't really work. You aren't doing the work that establishes trust, you are just burning the opportunity to get the ball rolling.
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Once you establish a low price, the customer will look elsewhere for someone who is trying the same loss leader approach with the other service that they need. And if you try to raise the price once the relationship is established, then they won't trust you.
Service loss leaders don't work. People are not loyal like that.
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www.geeksquad.co.uk/services/tech-support
Different market, different country. - They are many similarities between US/UK but some things are very different.
The more well known "GS" version we have in the UK is PC world, mostly retail stores and they have an office in each store for GS style techs.
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@Breffni-Potter said:
There may come a time when the bench side is dropped completely, I've done some number crunching and although the numbers are not massive, they are enough to justify offering it to those who need it, especially when you already have a pool of clients.
We don't allow bench services because of the insurance problems. Keeping someone's computer on site is a liability nightmare. Won't touch it. No money is worth that.
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@Breffni-Potter said:
Where as with this model, it is in my interest to prevent issues/problems, If a client is stable and happy across a year, that's a years worth of revenue as my incentive plus by preventing issues, I get an easier life. You cannot prevent 100% of problems but there is a lot of work you can do.
What you have is an adversarial agreement. This is the primary reason we won't consider these kinds of pricing structures. It is in your interest to deliver as few services as possible - maybe even to the point of incurring risk for the client. It is more cost effective to be risky and lose some clients to disaster than to do the right thing for most of them. It's like SAN sales, you make more money selling customers something risky, even if you lose lots of clients, because the margins are great. So this makes you the financial enemy of the client.
Likewise, it is in the client's interest to push for scope creep and get as many services provided within the agreement as possible. They have no interest in your cost problems.
This type of agreement requires you both to overcome the inherent "enemy" structure of the agreement. It rarely works.
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@Breffni-Potter said:
You cannot prevent 100% of problems but there is a lot of work you can do.
No, you can't. And when you take on all responsibility for preventing issues, any issue that comes along, even ones that you have no way to prevent, it looks like it is your fault because the responsibility for spending money to protect them was yours, not theirs. Every decision is yours, not theirs. Every failure, every blip, every outage makes them say "could he have spent more money and have prevented this? I'm sure he could have, I bet he's being cheap."
This type of arrangement leaves you looking bad, often even when you've done a great job.
