EP261 - How to Charge More Without Losing Clients with Justin Neale and Ian Luckett

IAN: In this episode of the IT Experts podcast, we're going to help you work out how to charge more without losing any of your clients.

INTRO: Welcome to the IT Experts podcast, the only podcast to help MSPs scale to 1 million, and if already there, get to five and go faster at the end of the day. Isn't it all about building a business that works for you rather than you for it? I hope you enjoy the show.

IAN: So good morning, good afternoon, good evening. Welcome to the IT Experts podcast. Today we've got a really great show for you. We're going to work out, help you work out how to charge more money, but not lose any clients. This is an absolute brain fog for many MSPs. And today on the show we've got Justin Neale, welcome back to the show. Justin, how you doing today?

JUSTIN: Very well. Thanks, Ian. Great to be back on the show.

IAN: Good stuff. No. And lovely to hear the subjects we're going to be talking today because it kind of doesn't make sense to a lot of MSPs does it? This, how can I charge more money and people will not leave. It's this whole fear thing. We're going to help you overcome the fear of putting your prices up, overcome the fear of not, you know, dealing with these things in account management. But, anyway, before we get to cracking, Justin, who are you? What do you do? Why'd you help? Why are you on the podcast today? How did this happen again?

JUSTIN: Well, I am Justin Neale. I run the Value Alchemists and I created it a couple of years ago after 25 years in corporate life where I was working within the aviation sector with all the airlines around the world. And I had a fascination with how really the airlines are amazing at how, their pricing strategies, you know, they essentially are all charging for the same thing. It's getting you from A to B, and yet the ways that they generate income from that, those seats on the flights and the way that they do that in a myriad of different ways, kind of really got my interest. And since leaving corporate life, I've tried to bring some of those skills and expertise and things I've learned to SMEs and specifically to MSPs.

IAN: Excellent stuff. And this has been going, it was a couple things. It was a couple of years ago we had you on now talking about customer experience, wasn't it? That was a really great show. And now we're talking about the premium pricing paradox. This sounds like a bit of a framework you've put together here. What's this all about? What's the situation that we're in right now? Why do we need to be worrying about this sort of thing?

JUSTIN: I think at the moment so many businesses are worried that they don't have enough business coming in. And so they're terrified of losing any of their existing customers. And that means that a lot of businesses are frozen that's paralysed with this fear that if they put their prices up, their customers will leave. And this is the paradoxical part of it, is that actually if you keep your prices the same or you end up competing on price and lowering your prices, you are actually damaging the perception those customers have of your service and you actually are a greater risk of losing those customers than you might think. And so that, that's really the paradox that going in with a premium pricing proposition can actually deliver you better clients and even more loyalty for those clients. And we'll maybe come to it a bit later, but I've got some great examples of actually how it can actually deliver a better service, even if you change nothing but just the price.

IAN: Isn't it funny though, because you know, we talk a lot about value. We talk a lot about, you know, you've got to demonstrate the value. If you demonstrate the value, then the perception of that value will be the worth that you get paid. And, you know, the analogy is always the same. You know, there's lots of different types of cars. Some are hundreds of pounds, some aren't millions of pounds, and yet some people will go, yeah, but there's no point buying a car that value, because I only want to go to Sainsbury's and other people are going, wow, look at this car. I want to own it for completely different kind of like reasons. So there's this whole perception of value which the MSPs get stuck with. Why do MSP get so fixated on selling technology rather than selling the value? And why do they find it so hard?

JUSTIN: I think it's because it's what they know and it's what they love. They understand the technology and the deliverables, so they end up selling that menu of items. You know, it is a bit like, you know, a restaurant menu where there's lots of different services and they advertise what they do in that way, and they almost let the customer choose. It's kind of, well, okay, I need RMM, I need, you know, antivirus, I need cybersecurity, I need cloud backup. I need immutable backups, whatever it might be. When actually, if you turn that around and you look at what's the problem that customer has and you package a solution. That really meets that need of that client, they'll pay a premium for that because you're suddenly talking their language. But I think it's that getting your head away from the deliverables, because that's what you're dealing with day to day, that's your life. It's quite hard to take that step back and actually just think about the outcomes and actually what the client really needs.

IAN: And it all falls into this horrible thing of sales and marketing, doesn't it? You know? The MSP's worst, worst vice they could possibly have. I hate it. I hate it. I hate it, but I know I need to do it right. It's just this horrible crunch of a machine that they're in when they're trying to get themselves organised.

JUSTIN: Exactly

IAN: You know, and it, it's bizarre how, you know, when with some of the MSPs, when they, they see other, other MSPs doing the same thing, they just kind of follow them. How do you think that they can stand out from the crowd with regards to getting, you know, getting the right thing in the right place in terms of that?

JUSTIN: I think the first thing is to really understand, you know, which customers you want to serve. And we always talk about niching, niching down in terms of finding your ideal customer. But the reality is you have to find those customers that you can solve a real problem for. And if you offer a generalist service to a generalist group of companies, you are so easy to compare with everyone else. There's nothing that lets you stand out. And that's then just a path down to being compared with everyone else on price as well. Because if your customers can't see something unique about your offering, then why would they pay any more for it than someone else down the road? And most MSPs, you know, what I do initially with them is just work out what is unique about their offering. Looking at their existing customer base, it's usually fairly obvious to someone outside their business, but really hard for them to see inside the business. And looking at all their customers, which ones do they love to work with? Which ones do they really have a little bit more of a grip on the industry, the problems facing those customers. Those are the bits where I suddenly go, well, you, you've got a niche already. You just don't realise it.

IAN: Yeah. Why don't MSPs put their prices up? How many people do you talk to? How many people do I talk to? And they go, well, I just kind of haven't really done it yet, but this is just, Craig, I know we're going to cover this in a minute, but...

JUSTIN: Yeah.

IAN: What's the reason that MSPs don't put their prices up?

JUSTIN: It's, it's fear. It's fear that those customers will leave. And I think, you know, I've, I've worked with MSPs that have not put their prices up in two years, three years, and one was even five years. And I met a supplier to the MSPs who hadn't put their prices up in 10 years. Oh my gosh. And that fear is always going to be that I'll lose all my customers. And it all depends how you communicate. So if you're going to communicate a price increase you know, you can get away with a small price increase with pretty poor communication. But if you want to go for a much more significant price increase, let's say 15, 20, 25%, yeah, you've really got to pivot to talking about value. What have you already delivered and what are you going to deliver? And that's often where it's really about looking at pivoting in terms of that stack that they're going to be selling and moving away from deliverables to selling based on an outcome or a set of results they're going to deliver to their clients. And if you position it well, typically you'll lose less than 3% of your customers with any well-managed price increase. And they're always the ones that are the most price sensitive, the ones you hate to work with and you know, and I always model it so that you know, we estimate, you know, which customers we go through, score them, which ones are going to be the most price sensitive, which ones are at risk and you model the price increase so that you don't run a risk of ruining the business. And then once they've gone through that first wave of customers, they put the prices up and there's zero pushback, they go, oh, I know we should have charged a bit more.

IAN: Yeah. You do that and then the ones who do kick off about it, well, you probably weren't making any money out of anyway, but that's a whole another podcast talking about profitability and all of that kind of stuff. Anyway, but...

JUSTIN: Absolutely.

IAN: Right. Let's get into the meat and the bones. What is the premium pricing paradox? What's this concept all about?

JUSTIN: If we look at a couple of examples, you know, of commoditised markets, there's a really a lovely one that I use, you know, in some of my presentations, which is Liquid Death. I don't know if you've heard of it, you know, it's canned water.

IAN: Oh, okay. Yeah.

JUSTIN: A guy called Mike Cesario created this as a concept because he was a muso, he was going to festivals, he was going to parties where there was people drinking. It was energy cans. But filled with water and it was kind of labeled festival water because people were at these festivals, they were maybe sponsored. But what they wanted it to do was drink water. They didn't want to drink energy drinks all day or beer all day because they were performing and everything else. And he could also see that there was this growing movement of non-drinkers, people that were image conscious, but they didn't necessarily want to turn up at a party, you know, with beer. They weren't drinking, but they didn't want to have a bottle of Perrier or Evian, kind of, you know, in their bag. And so he just did a, he designed a concept can, it was just some graphics, some artwork. He put it out on social media and he said, you know, this is what I would like a can of water to look like. And if anyone had asked you, you know, I, you know, if you'd said, I really want to get into the canned water market, I think there's a great opportunity there. Everyone said, you are absolutely mad. I mean, it's so commoditised. You can buy water for 20 cents in the supermarket or up to 10 pounds. There's no money to be made. And yet social media kind of went crazy over his branding and designs. And so he decided to launch it as a product. And in 2024, that company was worth 1.4 billion, the valuation.

IAN: Wow.

JUSTIN: And he only came up with a design in 2017, and it was generating $240 million of revenue a year.

IAN: That's crazy.

JUSTIN: And all he did was find a problem that could be solved and immediately he could charge. Beer prices for canned water, and there's nothing special about the water. He's been on a podcast. They said, is there anything special about your water? He said, no, I source it from the same place everyone else does.

IAN: The tap.

JUSTIN: And it was just still water initially, and he only moved into sparkling water and flavoured water later. And I think that's the that's really the key. But the paradox bit's kind of interesting. There was another experiment, that I referenced quite a lot. A guy called Dan Ley, he would, he was a teacher and whenever his students complained of having a headache, he would give them an aspirin. And some days he'd say, oh, I'm afraid I've only got the budget aspirin. It's like 10 cents a tablet, you know? Here you go. And he'd say, you know, later on, oh, is your headache better? And 65% of the people taking the budget aspirin said, yeah, yeah, my, my headache's gone. Thank you. Other days when someone asked he would give them the premium branded aspirin or the pain relief, and he said, well, you, you are lucky. You got the good stuff today. It's two pounds a tablet, and 85% of the students reported their headaches were improved after taking it. And the kicker was, all of them were placebos.

IAN: Yeah.

JUSTIN: He couldn't actually give, you know, paper.

IAN: I was going to say, I was going to say, this doesn't sound like a very good, a good thing to do in a school.

JUSTIN: It wasn't ethical, but there is something about the fact that people believe they were getting the premium product, they went into the experience expecting the outcome to be better.

IAN: Yeah.

JUSTIN: And if you look at any two products on the shelf, let's say you go into any supermarket today, you've got the own branded pain relief, you know, 30 pence, you know, for the aspirin, ibuprofen, whatever it is. You know, the Boots own brand or the co-op owned brand, or you can buy neurofen for four pounds a packet. It's exactly the same product, same active ingredients, no difference. But if you are in pain and you go in, you've got a back pain, you've got a really bad headache, which one are you going to choose?

IAN: Yeah.

JUSTIN: You are most likely going to choose the premium one because you have a problem and you don't want to take the risk of going with the cheapest solution.

IAN: Yeah. And yet they're probably exactly the same products.

JUSTIN: They're exactly the same.

IAN: Which is the craziest thing. Oh, it all goes back to that perceived value, doesn't it, at the end.

JUSTIN: Perceived value. And it's the same with MSPs. So if you are operating as an MSP to a generalist, you know, we support, sort of any SME with their, it needs you, you are just like the own brand pain relief on the shelf. And if you then pivot that and you really sort of say, actually what we do is, you know, we enable a hundred percent uptime for your manufacturing business because we understand how much any downtime costs you. That's a very different message, and I think that's where, you know, finding your niche, working out how to pivot and charging a significant premium actually means you are much more likely to not just be selected, but also to have, of course, way higher margins of profitability.

STUART INTERRUPT: If scaling your MSP is your goal, but you're not sure which road to take, then you'll really want to get hold of the MSP growth guide. It's the shortcut most MSPs wish they had much earlier on to work out what the right support is for them. Even better, if you like meeting up in person, why not come to join us at one of our live events? See the system, meet the people, get inspired, get to kick the tires and see exactly what we get up to at the Growth Hub. So, details are on the show notes below. Go have a look, click and come and join us and we look forward to seeing you another time, but let's get back to the show.

IAN: Thanks, Stuart.

So how do we, how do we help the MSPs to become more confident in, putting their prices up or assessing which prices they need to do what, how do they, how do they approach this? What's the most logical step in your view?

JUSTIN: So, I love customer scoring. So it's something you can do both with your existing customer base and to pre-qualify new customers. So subjectively, everyone has an opinion over what makes a good customer or what makes a bad customer. Customer scoring takes away a lot of that subjectivity and makes it more of a quantifiable process. So you go through your customer base, your existing customers, and you actually look at, okay, well who's got the highest customer lifetime value? Who do we really like working with? As in who do we like communicating with?

IAN: Yeah, key point.

JUSTIN: And you come up with four or five different factors. But they're really a measure of who are your best customers. And you'll see a pattern in there somewhere. And it's usually the ones where you really understand their business, you understand their issues, you add value to their business. And they're quite often the customers who, when they're making a change in their business, are coming to you as an MSP to say, oh, you know we're thinking about this, can you help and make sure, that you know, we're going to get this right first time. And once you've narrowed that down, you realise you've already got a niche, you just didn't realise it. And you can then use that to say, okay, well how do we now attract more of those? And so you come up with a very similar scoring strategy to pre-qualify more customers. And they're the ones who are probably going to be the ones who are going to be most profitable, the easiest to work with. And generally the ones that actually your team love working with as well.

IAN: Isn't that the most important thing, you know, people, we talk about every day pretty much you know, your vision and values of the business and you know, many times, we hear clients say, well, we're working with this particular sector, but the team actually don't like working with them because they don't get IT, they don't understand it. They're hard work. They're always really demanding. They're probably our least profitable client. And yet everyone wants to come to work to help someone out and have a nice time and have a bit of fun and connect with people and all of that kind of stuff. So it's really funny you mentioned the ones that you want to work with because it's so many times we have conversations in the growth hub with clients about well, how much money you actually making from that client? And how much money is that? Is that customer making you? And they'll start off with, I don't know. And then when they go and find out, they, they realise that natural fact would actually better off with a smaller business, with a more profitable, with the better clients and that...

JUSTIN: Yeah.

IAN: And that's a really key thing, isn't it?

JUSTIN: I do find that a lot of MSPs take it almost as a badge of honour, that they've never lost a client. They say, you know, unless the client's got being acquired.

IAN: You should have done.

JUSTIN: And you know, I think healthy attrition, you know, don't worry 10, 15% of your customers, you should really be looking at that bottom scoring customers and making some decisions. Do we want to keep them, because they're scoring low. And they might be scoring low in a couple of areas, or can we do something about the relationship to, to actually improve the score. Otherwise it's probably time to figure out a way to, to sort of manage them out of the business.

IAN: Excellent stuff. Right, what else do we need to do? Kind of when you're deep diving into this and really getting started on it.

JUSTIN: So a lot of the stuff you've just sort of touched upon is thinking like, well what is the margins we're making on each of our customers? And simplifying the business because if you are going out with a really complicated menu of services and deliverables, you know, you are confusing your clients. You know, you are expecting a business who wants to buy your IT services to understand and prescribe their IT to, you know, for themselves. Actually, your job as an MSP is to look at your customer, look at the problems they're facing, and actually go to them with a proposition of what they need to solve their problem. Yeah, and I think once you get into that mentality of really thinking about it from the customer's perspective, everything kind of changes because all of a sudden you're talking their language. You're talking not about the deliverables, you're talking about the problems you're going to solve, and the return on investment it's going to bring your clients. And once you can sort of start looking at it that way, it's a no brainer because quite often as an MSP, you will be saving your clients money one way or another. Because you'll be protecting their business from cyber attacks. You'll be ensuring uptime of their services. You'll be, you know, making sure that their staff are more productive through all of the services that you provide. The key is not to have a basic kind of generalist set of services and deliverables that you let the customer choose. You need to have that conversation and just solve a problem for them. So my sort of main message is just ask the right questions. Try and find out exactly what problems your customer has, and then prescribe them with a solution that meets those needs.

IAN: Love it. And it's as simple as that, isn't it? Okay, so I want to talk to you about belief, Justin, because recently we were talking to one of our clients, we do some tactical work with them, with their sales and marketing, helping them kind of get it off the ground. And, this one client, she had an event the next day. And, I said to her, I said, what's your, what's your KPIs? What's your targets? What does a good event look like? And she goes, well, it's to probably get some phone numbers and all of this sort of stuff. I said, whoa, whoa, hang on a minute, hang on. Stop, stop. I said, do you believe that what you do, it's really going to add value to your client. It's going to help them in their business. It's going to help them do stuff more efficiently, more profitably, you know, and in line with your business purpose. And she looked at me and paused, and you don't need to say anything after the pause, really, apart from the fact of I maybe don't what? You've got to believe in your product, you've got to believe in the service that you do. And until you get that belief, I think that the sales can be really quite hard. What's your kind of view on, on building that belief and that you know that yeah, we are the people to solve your problems and to, and to really have that depth of confidence, I guess.

JUSTIN: Yeah. That self-confidence, isn't it?

IAN: Yeah.

JUSTIN: To do it. Most MSPs are solving problems for their clients all the time, but they just don't know that they are.

IAN: Yes.

JUSTIN: They don't, they don't ask the questions.

IAN: Yeah.

JUSTIN: And I think that's where a lot of the ways that an MSP works for the clients is very transactional. So the client raises the tickets, you know, they respond, good job. And they might present some monthly or quarterly metrics to show what they've been doing. But you really get under the skin of the client and you say, okay, you know what, where's your business going? What are, you know, what are you doing? How have we really helped you? And why do you like working with us? And you'll find there's a pattern in the answers. And quite often it's well. Actually you've really enabled us to scale our business.

IAN: Yeah.

JUSTIN: Because actually before we were hampered by, you know, sort of our IT, you know, and nothing would really work, the answer will be different for every client. But when you start to hear those answers coming back and you realise the value that you are truly delivering, it makes those conversations at a trade show or whatever it might be much, much easier, because when you're having that conversation and someone's going through one of those pain points, maybe they're looking to scale, they say, oh. We've got, you know, a client on our books who had exactly that problem, and this is how we help them through that.

IAN: Yeah.

JUSTIN: Yeah. And what an easier conversation to have than, you know, who are you, oh, you know, I'm an IT service provider and I offer X, Y, and Z.

IAN: Absolutely. Absolutely. Justin, just a, a quick question before we start to bring this one in for a bit of a close, let's talk about customer's journey mapping. So. Yes, you've got, you know, you're an MSP, you're solving lots of problems for your clients, and they are, you know, coming towards you most of the time with those problems. And then you fix that problem and it goes away, and then something else happens, and then fix a problem that goes away and something happens. But what we really want the MSP to do is be more proactive, isn't it? So how does an MSP open up that maybe it's an account management question, it probably is an account management question, or even that kind of like process about where the customer's at and what problems they can solve them. Because if they can solve a problem proactively, that's going to be even more valuable, isn't it?

JUSTIN: Yeah. And it is a great question because within a business you have a lifecycle. So you've got all the way from awareness, marketing, sales, through to kind of service, delivery, and support. But that's just a lifecycle. And within that lifecycle you've got dozens of touch points potentially throughout the lifecycle and within each of those there are many, many customer journeys. And businesses will normally have anywhere from a a dozen to even hundreds of individual customer journeys from how they initially engage with you, signing a contract, getting support, and customer journey mapping is a way to visualise those individual journeys a client takes with you. And often when there is something which happens a number of times, so you're seeing a pattern in the types of things which are coming into maybe the ticket desk, you can look at that as a journey and say, okay, well why do we have so many queries coming in from all of our customers? Or maybe a subset or maybe even an individual customer. And customer journey mapping is that process of either working as a team internally or ideally you bring your customer in and you work with them to say, okay, really interesting how you perceive this journey versus how we see it ourselves. And the goal is to make significant, you know, movements in terms of how that journey flows for the customer so that you are proactive, you're making changes which have a very positive impact on the customer, but of course that then has efficiencies internally. And this is something which you can use, you know, once you've done it once, you can then apply to any of the other journeys. And it nearly always results in cost savings, efficiencies, and an improvement in customer satisfaction.

IAN: Excellent. Justin, thanks ever so much for your time today. Not only preparing, but the show again, absolutely massive golden nuggets there for MSPs to come over this whole pricing, fear of pricing, fear of putting your prices up. What's some of the summary points from today's show to share with them?

JUSTIN: I think the key is stop selling a list of services and deliverables and start selling outcomes. Work out what the problems are that you solve for your clients and just focus on that. Once you get your head around that, everything else is easy.

IAN: Brilliant stuff. I've got a little surprise for you, Justin. I was on a podcast the other day with Heim Dial, and the guy asked me a question, and I'm going to ask you the same question. You do not know what I'm going to say. This is going to be hilarious. This could go one way or the other.

JUSTIN: Okay.

IAN: You're on a, you're just about to go on a spaceship. It's a positive journey that you are going on, but you're not coming back. You're going up the steps and there's all the MSPs that you've ever worked with. Standing there waving goodbye. You turn round, what are going to say to them? What's the one bit of advice you'd give the MSPs?

JUSTIN: This one isn't too difficult. Actually. Put your prices up.

IAN: Simple as that. And that is it. Lovely. And that's a mic drop moment just there. So that was a bit of crack, just literally came to my head while we were thinking then. So that was great. Thank you very much for being a good sport on that. Great bit of advice. Right. Justin, if people want to connect with you and learn a little bit more about what you do and how you can help them, how do they do that?

JUSTIN: Value alchemists.com. or you can find me on LinkedIn. Justin Neale.

IAN: Fantastic, brilliant stuff. As always. It's a pleasure talking to you. I'm really pleased the success you've been having in your business the last couple of years and wish you all the success over into 2026. And thanks again for the show and I look forward to catching up with you all on the next one.

OUTRO: Wait, wait, wait, wait, wait. Just before you go, and if you're curious about how this episode links with the ability to scale your MSP to a million or, or if you are already there, accelerate to five, then we want to invite you to come and take the MSP Mastery quiz, and in just three minutes, you're going to get 360 degrees scan of your business where you can identify the one or two tactics that can help you find more time engage in, align your people and help generate more leads in your MSP. It's really simple. Just click on the link in the show notes and if you have enjoyed this episode, we'd love to get some feedback from you by means of a rating review on Spotify or iTunes, or your podcast platform of choice. We really appreciate every single one of them. Now, you can go and enjoy the rest of your day and we look forward to catching up and connecting with you soon. All the best day.