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How Should I Price My Online Backup Service? 2017-04-19T20:20:30+00:00

HOW SHOULD I PRICE MY ONLINE BACKUP SERVICE?

how to price backup service

This is a question we get frequently from our Reseller Network, and luckily we have 10 years of experience selling offsite backup, so we can provide guidance. Here are a few tips you’re welcome to incorporate into your retail pricing scheme:

NEVER USE FIXED PRICING

Using fixed pricing is the easiest way to lose money on Online Backups. Your storage, bandwidth, and support costs scale with the amount of data/number of machines your customer is backing up, so don’t sell yourself short by agreeing to a fixed fee plan.

Instead offer a reasonable cost based on the number of GB’s being stored on your servers, or the amount selected on the customer’s machine. Both these metrics can be easily found on your management dashboard.

Most of our resellers usually reside in the pricing ranges below

The Range Pricing Model

Lower Range

$050Per GB
  • Pricing by the GBRange

Most Popular

$100Per GB
  • Pricing by the GB

Higher Range

$200Per GB
  • Pricing by the GB

The License Pricing Model

Lower Range

$000Per Machine
  • Charge Per License

Most Popular

$300Per Machine
  • Charge Per License

Higher Range

$600Per Machine
  • Charge Per License

This kind of pricing not only gives you solid profit margins (depending on your infrastructure costs), but allows you to increase the revenue based on consumption.  This leads us to the second tip

USE TIERED PRICING

Now that you’ve established your per GB and/or per Machine retail pricing, make sure you build a simple matrix of tiers based on blocks of data. Here’s a good example:

Tier A

$2000monthly
  • 0-20GB

Tier B

$3500monthly
  • 20-50GB

Tier C

$7500monthly
  • 50-100GB

Tier D

$15000monthly
  • 100-200GB

Notice how the first tier creates a minimum charge of $20 per month no matter how small the customer is? This is critical so you never have unprofitable backup accounts that bring in silly numbers like $4 per month. You lose money and waste time. Always establish a minimum charge so every single backup customer you sign up makes you money.

One of the best features of tiered pricing is it allows you to offer a “lower” per GB rate, while still maintaining margins. For example, a customer sees they can backup up to 100GB for just $75 a month (75 cents per GB), but reality is they will end up somewhere in the middle of the tier, generating $1 per GB in revenue or more.

Lastly, pricing in tiers makes monthly billing much simpler, as you don’t have to adjust a customer’s invoice just because their data grew or shrunk a few GB. Simple pricing equals less work for you.

USE A SINGLE PRICE FOR EVERYTHING – Don’t Upsell

Customers prefer to pay a single price that covers the entire solution, and can be very resistant to being nickel and dimed for add-ons, support, or even restoring data. Using this kind of pricing strategy increases attrition in our experience, as well as resources needed to deal with the complexity of the sales cycle.

Instead just focus on a reasonable value that includes:

You will find the process goes much smoother and your customers will stick around longer.

Hopefully this is helpful but don’t hesitate to contact us if you want to discuss pricing ideas in more detail. We’re always happy to provide guidance to our channel partner network of software resellers.

WHAT DO YOU WANT TO DO NEXT?

Questions?  Get In Touch, we are happy to help.

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