What Does The Inflation Rate Mean For Your MSP?

The latest inflation numbers were released today, and the year over year inflation rate is the highest it’s been in over forty years.  Inflation has gone up 7.5% in the last twelve months.  During that same period, wages increased 5.7%.  That means the average worker is making LESS in “real world dollars” than they were a year ago, and by a significant amount.  It means people who got a 7% raise year over year are making less than they were a year ago when it comes to how far their money will go.  It’s means a 10% year over year raise is the equivalent of a 2.5% year over year raise.

Got a pit in your stomach yet?  How should MSPs respond?

Pass It On.  Everyone knows the price of everything is shooting through the roof right now.  Your services should not be the lone exception.  Your clients know all of your costs have gone up.  Most of the companies we work with have gotten no pushback to speak of on recent rate increases.  Don’t be the sucker whose revenue declines 7.5% in “real world dollars” because you’re too scared or distracted to raise rates.

Call Time Out.  What I mean is this – have you evaluated whether your packages and pricing make sense in the current market?  Have you sought an expert’s opinion?  Is it time to make significant changes to your offering to eliminate break/fix clients or bundle security services with your support offerings?  Do it now.  Don’t raise your rates and then change all your packages and raise your rates again in 3 months.  Your clients will tolerate a rate increase, and they’ll understand you modernizing your offering.  They won’t tolerate repeated changes to your service and their bills.  You may be able to charge significantly more if you can make the case that they are getting much more for their money.  But you can’t keep going back to the well.

Pay Your People.  In particular, pay the ones you’d really miss.  Be brutally honest with yourself about their worth on the open market.  Ask around.  Check Indeed or Zip Recruiter.  If they leave, it will be a painful disruption to you and your business.  On top of that, you’ll have to pay their replacement market value, not knowing if the new hire will work out as well as the worker you already had and liked.  The group of people most important to your success is not your clients, it’s your employees.  Retain great employees and great clients will follow.

Smart MSP leaders pay attention to business considerations, not just tech problems and ticket counts.  If no one in your company is driving the bottom line, it will show, particularly now.  If you don’t think your folks will notice they’re worth much more on the open market, sooner or later you’ll be in for a rude surprise.  In a market this extreme, doing nothing is not an option.  You need to respond.