5 Smart strategies in implementing price increase without losing customers

  • Hosted Network November 19, 2021
  • Hosted Network Madeleane Abejero
  • Hosted Network 3 mins

With the increasing costs of running your MSP each year, raising your prices is an important way to pay for your overheads and keep your business profitable. While it is apparent that no one likes price increases, not doing so can affect the quality of the service you provide to your customers.

We understand that conversations about raising your rates might get a bit uncomfortable. In some cases, you might even avoid it. But not increasing your rates may lead to negative repercussions to your business in the long run. To avoid this from happening, here are some smart strategies on how to handle price increase effectively:

1. Don’t be shy about it

Price hikes are becoming ubiquitous each day. The global inflation rate affects all the prices of goods and services that we purchase –  be food, clothes and all of life’s necessities. Your customers are well aware of continuous price increases so they expect the same thing from you. Some might even have projection plans and allot budget for the regular price increase implemented by their vendors. You just have to explain the reason and expectations that come with it clearly (Which will be explained on the second strategy).

2. Be honest and communicate regularly

Being outright about price increase is the only way to prevent doubts and distrust from your customers. Don’t try to sneak the price hike in your MSP contracts and wait until your customers notice the change. The best approach to price increase is to be upfront about it.

Best if you tell your customers that you implement  regular price hikes at the beginning of each year to set their expectations. Most importantly, tell them why. You are not just increasing your prices to get higher profits. Increasing your prices will enable your business to keep up with the costs in running your business and maintain the quality of the service you provide. The more advanced the technologies are, the higher the costs that you need to pay. Also, staff training and development should be invested in too to ensure that their skills and expertise meet the ever-changing and unique needs of your customers. 

3. Make it small and frequent

While the absence of price hikes for a few years sounds good to your customers, this might backfire when you throw a sudden huge price increase. It might feel heavier on their part if you do it that way. Instead of extreme price increases every 3-4 years, it’s more palatable to implement a small 2-3% increase every year – in line with CPI. With this approach, your customers will not notice the difference very much especially when you consistently communicate the yearly increase. 

Another idea is to include a CPI or minimum increase in your contracts. This way you can set the expectations up front.

4. Consider charging for services without support contract

While services that don’t have support contracts such as Microsoft 365 don’t bring in high profits, you can still create an additional source of revenue from these types of services by charging management fees. With over thousands of Microsoft users across Australia, this is a revenue stream that your MSP shouldn’t miss. 

Additionally, when you look at the bigger picture, charging management fees from multiple customers can provide a significant revenue stream to your business.

5. Walk the talk

Paying for any product or service is much easier when you see your money’s worth. Thriving MSPs stay on top because they efficiently and consistently prove the value of their services to their customers to the point that prices never become an issue at all.

So whenever you implement price increases, make sure it is justified by maintaining the high calibre of service you’ve provided since they’ve signed their first contract with your MSP. Ensure your credibility by bringing excellent customer service, solutions and staff expertise.


You don’t have to hold back on price increases especially when your profitability is at stake. You have to face the fact that price hikes sometimes lead to customer churn. When you think about it, maintaining loyal customers who appreciate your value and understand the costs that go along with it is way better than putting up with few customers who often haggle over your rates and fail to see your true worth.

Related Content:

White paper: An MSP’s Guide to Pricing and Packaging

On demand webinar: MSPs In Conversation: Smarter Pricing, Packaging and Systems in Increasing your MSP’s Profitability