System Integrators’ Best Practices for Pricing Work
When developing pricing for their services, systems integrators should avoid certain mistakes that can negatively impact their business.
February 22, 2023 - The growing complexity of ecosystems and a variety of industry trends is driving up the need for systems integrators and their services. Looking to capitalize on increased demand, many systems integrators are shifting to service models and considering the best ways to develop their pricing. Here are some the best practices for setting pricing as industry trends point to continued growth.
Best Practices for Pricing
Consulting has been and will continue to be a cash cow for systems integrators that build out this practice. Now, more than ever, systems integrators are turning to service models. But what is the best way to price out these services? Let’s break things down.
In general, revenue streams for systems integrators come in three broad buckets:
- infrastructure integration
- software integration
Many system integrators will already know how to estimate infrastructure integration and software integration. But, if you’re not sure how many labor hours an integration job might require, the National System Contractors Association recently published a guide providing the average labor hours required to complete a vast array of tasks for low-voltage systems. Download a copy and keep it as a reference for correctly estimating and closing more projects.
Now, how much should you charge and, more importantly, what types of pricing models should you implement? Many times, you’ll want to combine different ones to maximize profits and enhance your business value with ongoing subscription revenue. Here’s a quick snapshot of pricing strategies to consider for various types of work:
Subscription-based pricing: Systems integrators can charge clients a regular fee (e.g., monthly or yearly) for ongoing support and maintenance services. This approach can provide a predictable revenue stream and ensure that clients have access to the support they need to keep their systems running smoothly.
Value-based pricing: Systems integrators can charge based on the value that their services bring to clients. This approach involves assessing the impact that the systems integration work has on the client’s business and pricing accordingly. This approach can be more profitable for systems integrators, but it requires a deep understanding of the client’s business and the ability to quantify the value of the work.
Project-based pricing: Systems integrators can charge a fixed fee for a specific project. This approach can be beneficial for clients who have a well-defined scope of work and a clear understanding of what they want to achieve. However, systems integrators should be cautious to ensure that they accurately scope the work and account for any unexpected issues that may arise during the project.
Time and materials pricing: Systems integrators can charge clients based on the time and materials required to complete a project or provide ongoing support. This approach can be suitable for clients who have more fluid needs or who are not sure what their ongoing support requirements will be.
The Do’s and Don’ts
When developing pricing for their services, systems integrators should avoid certain mistakes that can negatively impact their business. Here are a few “don’t”‘s when developing pricing models:
Don’t base pricing solely on cost: While it is important to understand the cost of delivering the services, the pricing should also reflect the value that the services provide to clients.
Don’t underprice: Avoid underpricing to gain clients. Underpricing can attract clients in the short term, but it can also lead to not making enough profit to sustain business in the long term.
Don’t overprice: On the other hand, systems integrators should also avoid overpricing their services. Overpricing can deter clients and reduce the overall demand for services.
Don’t ignore market research: Systems integrators should be aware of what their competitors are charging for similar services and what clients are willing to pay for those services.
Don’t be inflexible: Systems integrators should be willing to adjust their pricing based on the needs of their clients and the market.
Don’t forget to review and adjust pricing regularly: The market, competition, and cost of delivering the services can change over time, and pricing should reflect these changes.
To create the best service model and systems integration business, finding the right partners is key. Canopy is a remote monitoring and management platform that supports system integrators, making it easier for them to scale and provide the most competitive services.
We would love to show you how are systems work and how you can gain efficiencies as you create You can contact us or schedule a free demo to see results right away.