For Value Added Resellers (VAR), it’s not news that making money from product sales is getting increasingly more difficult. In last week’s webinar, 5 Key VAR Strategies for Strengthening Margins and Increasing Your Value-Add, Frank Scavo, President of Computer Economics, opened with this sentiment. To further illustrate this point, Frank presented this graph from the Federal Reserve Bank of St. Louis, which shows a steep decline in computer and peripheral equipment prices relative to communication equipment and software prices.
He attributed this decline to (1) increased competition, (2) pricing transparency and (3) open source alternatives. The second part of his presentation provided examples from the most successful VARs who are adopting strategies to strengthen their gross margins while at the same time increasing the “value-add” side of their businesses.
Finally, he presented 5 key strategies these best-in-class VARs employ:
1 – Know Your Margin. Not all deals are created equal. See the full picture including freight allocations, landed cost and manufacturer rebates.
2 – Enforce Pricing Policies. Establishing pricing rules and enforcing them with CPQ systems.
3 – Increase Up-Sell/Cross-Sell. Expose customer to more profitable products or services AND/OR offer related products and services.
4 – Improve Sales Productivity. Lower the cost of sales by employing systems to help sales people spend more time selling.
5 – Get Bigger. Enjoy better OEM pricing, greater market credibility and reduce cost with economies of scale.
This webinar serves as a road map for every VAR executive who aims to protect their margin in 2015. Click here to watch the full recorded webinar with attendees representing managed service providers, OEMs and consultant companies.