8 UK partner leaders reveal how they are tackling price rises

HPE's CEO last week urged partners to follow its lead and raise prices. But how are UK resellers and MSPs approaching this thorny topic?

Doug Woodburn
clock • 22 min read
8 UK partner leaders reveal how they are tackling price rises

HPE and IBM's CEOs both said last week that it was right to raise prices in light of rising labour and supply chain costs, and advised partners to do the same (see here and here).

But how are some of the UK's top channel partners approaching this thorny topic?

The weak pound, coupled with supply chain and economic woes, has prompted some vendors to hike their UK price lists as of this month (by an estimated 5-15 per cent in some cases, according to some commentary). And wage inflation and skills shortages are lumping yet more cost onto firms in our sector, particularly those with a services bent.

But to what extent, and how quickly, should these cost and price increases be passed on to customers?

Here we quiz the leaders of eight UK channel partners to get the inside line on their strategy.

‘We should hold back, at least until the New Year'

Rickie Sehgal, CEO Transputec

Vendor CEOs have been vocal about the need to raise prices and have advised channel partners to do the same. Looking at both the products and services you offer, how critical is the situation for your business?

I don't agree with the American based CEOs suggestion that we start to raise prices. This might be OK for the USA but it is counter-productive for the UK. Sure, we all want to raise prices, but it's a little too early in my opinion and we should hold back at least until the New Year. It would be wrong to raise prices now and destabilise further the already unstable market by kick starting a deep recession which will lead to an increase in unemployment to add to the miseries of working people.

To what extent do you expect to absorb recent/ongoing cost increases around headcount and hardware/software prices, at least in the short term?

Our Board is unanimous on this decision. We plan not to increase prices whilst monitoring the situation until the New Year. However, we are doubling our efforts to speak to all our staff about the market conditions, improving their job security against turbulent times ahead. We plan to assist those who are the most vulnerable with financial support whilst resisting general salary increase demands.

What's the right approach…should price rises be done in one go, or in stages, for instance, and to what extent will your strategy vary when it comes to consultancy, managed services and product resale? 

There is no one simple solution that will deal with the different parts of the business. Our business can be split into three main categories: hardware/software, managed service contracts and professional services. Price increases for managed service contracts will be the most challenging because they are all unique, some with different inflationary increase provisions and different renewal anniversaries. Our clients are in the same boat, they don't want to pay more and pass on increases down the chain.

We are going to take a longer-term view on the professional services and resist increases and monitor the situation until quarter four. The hardware and software prices are likely to be passed through to the clients as the vendors increase their prices to us. I suspect initially margins will reduce because of increased competition and some cost abortion capability.

HPE's CEO recently described HPE as a ‘market leader' when it comes to price rises. Is it better to lead or follow?

I don't agree. Leading a price increase charge may be OK for some but not for us. Transputec values loyalty of their staff and clients over the short-term profit downturn. We are by nature a prudent company, and this has served us well over the past 35 years.

When dealing with big increases in your overheads and the price of the products you carry, what's your top tip for protecting margins while - at the same time - keeping customers happy?

    • Over-communicate with your staff and help where needed.
    • Address the individual needs of the most vulnerable first. Personalise the support that you offer to each person in need.
    • Cut waste in your organisation.
    • Improve operational efficiency
    • Maintain loyalty and share the pain with your staff and clients

"To say that you are the market leader when it comes to price rises sounds like the dumbest statement ever." Which UK partner leader said it? See next page for more...

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