Why Most Businesses Pay Too Much for the Services They Need

All businesses must subscribe to at least a handful of basic services to operate efficiently. For example, you’ll likely need to have an internet connection and some kind of telecommunications provider at a minimum. Most business owners see these expenses as immutable, signing up for the services of the first provider they find and never questioning the rate they pay. Accordingly, they never realize that they’re paying too much.

So why is it that businesses are consistently paying too much for these extra services?

Failing to Shop Around

One of the best things a business owner can do to find a better rate for necessary services is shop around. There are likely dozens, if not hundreds of options available to you, all of which offer a similar baseline quality. Especially now that many services can be provided virtually, you should have competitive options all over the country, if not the world.

Too many business owners adopt an “it costs what it costs” mentality, assuming that the first quote or two they receive is an accurate reflection of the best prices available. However, if you work to get more quotes from more business service providers, you’ll likely find that more deeply discounted rates—or at least more favorable packages—exist.

Contracts and Auto Renewals

Many phone, cable, and internet providers encourage business owners to sign a long-term contract to get a better deal. However, the one-two punch of lengthy contracts and automatic renewals can ensnare businesses in perpetual overpayment. It’s typically much better for businesses to engage in more flexible contracts, which don’t automatically renew at the end of their expiration period, or no contract at all. Just because a contract ends up giving you a slightly lower monthly rate doesn’t mean it’s cheaper or more efficient in the long run.

The key here is finding a contract with terms and conditions that work in your favor. Don’t be afraid to push back, or continue shopping, if a service provider is trying to foist an unfavorable contract upon you.

Sneaky Extra Fees

Many business service providers try to increase their profitability without compromising their competitive pricing by offering a reasonable, flat rate, but also imposing several additional fees to make up the difference. For example, you might face a late fee if your payment is late, or overage charges if you use the services too frequently, or fees that sound made up, like transaction fees, handling fees, or other surcharges.

Note that some of these fees may be legitimate or required, like fees that are passed through to government regulators. However, many of these extra fees serve only to increase your bills, and can be avoided by choosing a different provider.

Bundles and Unnecessary Features

Some service providers try to upsell business owners by offering them lucrative bundles. They offer multiple services simultaneously, and can show you how you’ll save money by purchasing all of these services simultaneously. And to be sure, if you use all these services and extra features, the discounts may be well worth it.

However, most businesses don’t truly need all the services or features included in the most robust service packages. Accordingly, they pay a discounted rate, but end up paying for more features than they truly need. Every month, that’s wasted money that could have been used for something more core to your business’s needs.

Failing to Negotiate

Almost every contract you sign or service you get for your business is negotiable, but some business owners aren’t willing to get in and fight for a lower rate. There are several tactics you can use to try and secure a better rate for your business, and some of them are ridiculously simple; for example, sometimes you can get a lower rate just by asking for one. You can also leverage two competitors’ quotes against each other, fight for a shorter contract, or push for a lower rate than you think you can reasonably get.

Some service providers may not be willing to negotiate at all, but this shouldn’t deter you. Instead, it should serve as motivation to see what other competitors are willing to offer you.

Paying Less for the Services You Need

Just because you need a service for your business doesn’t mean you’re forced to pay a set rate, or that you have no control over what you pay. Many business owners fail to consider these important factors, and therefore pay more than they should for these baseline services. If you’re shopping for basic services for your business, make sure you’re looking at multiple competitors, scrutinizing extra charges, carefully considering the bundles you’re evaluating, and negotiating for a lower rate. If you do this, you’ll end up in a much better financial position.

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