The Pricing Conversation That Changed Everything

I used to hate pricing conversations. They felt awkward, confrontational, and always seemed to end with clients asking for discounts or questioning our value. But one conversation with a potential client changed everything about how I approach pricing.

The client was a small manufacturing company looking to replace their current MSP. During our initial meeting, the owner, Tom, was very interested in our services. He liked our approach, our team, and our technology. But when we got to pricing, his face fell.

"Steven, your price is almost double what we're paying now. How can you justify that?"

Instead of immediately offering a discount or trying to defend our pricing, I did something different. I asked a question.

"Tom, what's the most expensive IT problem you've had in the past year?"

The Story That Changed Everything

Tom leaned back in his chair and told me about an incident that had happened six months earlier. Their email server had gone down on a Monday morning, and their current MSP couldn't get it fixed until Wednesday afternoon. For three days, they couldn't communicate with customers, process orders, or coordinate with suppliers.

The cost? They lost two major orders worth $150,000 because they couldn't respond to customer inquiries in time. Their current MSP's response? "These things happen."

"That's exactly why our pricing is higher," I said. "Because we don't believe these things should just happen."

The Value Conversation

From that moment, the conversation shifted from price to value. Instead of defending our costs, I started explaining our approach:

Prevention Over Reaction: We don't just fix problems; we prevent them through proactive monitoring and maintenance.

Rapid Response: When issues do occur, we respond within hours, not days.

Business Continuity: We design systems with redundancy and failover capabilities.

Strategic Partnership: We don't just maintain your systems; we help you use technology to grow your business.

Tom was quiet for a moment, then he said something that surprised me: "You know, I never thought about it that way. I was focused on the cost, but I should be focused on the value."

The Transformation

That conversation taught me something fundamental about pricing: when clients focus on cost, they're thinking about expense. When they focus on value, they're thinking about investment.

The difference isn't just semantic; it's psychological. People will pay almost anything for something they perceive as valuable, but they'll haggle over every penny for something they see as an expense. This principle is fundamental to McKinsey's value-based pricing strategies that focus on business outcomes rather than technical features.

The New Pricing Approach

After that conversation, I completely changed how I approach pricing discussions:

Start with Problems: Instead of leading with features and pricing, I start by understanding the client's biggest IT challenges and their cost.

Focus on Value: I frame our services as investments that solve expensive problems, not as costs that add to their budget.

Use Stories: I share examples of how we've helped other clients avoid costly disasters.

Be Confident: I don't apologize for our pricing; I explain why it's worth it.

The Results

The change in approach had immediate effects:

Higher Close Rate: We went from closing 60% of proposals to 85%.

Better Clients: Clients who understood our value were more engaged and easier to work with.

Less Discounting: We rarely had to offer discounts because clients understood what they were paying for.

Stronger Relationships: Clients who valued our services were more likely to refer other businesses.

The Broader Lesson

The Tom conversation taught me that pricing isn't about being the cheapest option; it's about being the most valuable option. And value isn't determined by features or specifications; it's determined by the problems you solve and the outcomes you deliver.

When clients understand that you're not just selling them technology services, but protecting their business from costly disasters and enabling their growth, price becomes much less of an obstacle.

The Bottom Line

Tom became one of our best clients. He never questioned our pricing again because he understood the value we provided. And more importantly, he became one of our biggest advocates, referring other businesses to us because he knew we were worth the investment.

The lesson? Don't compete on price; compete on value. Because when clients understand what they're really buying, they'll pay for it.

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What's your experience with pricing conversations? Have you found ways to shift the focus from cost to value? I'd love to hear your strategies.