With an already fiercely competitive industry becoming more saturated by the month, we must ask the question, why is the majority selling inclusive handsets?
Is this down to the ease of use for an end user making the move to hosted telephony, rather than the core business benefits? No hardware cost, limited install cost and no more monthly maintenance fees, it can seem a no brainer.
However, when there are inclusive handsets available from many providers, could this be impacting the overall deal for both the end user and supplier?
PBX – The traditional model
Historically selling a PBX was straightforward, and financially rewarding for a telecom’s reseller. Making 20% + on hardware, a fair installation fee and most of the time a maintenance contract to go along with it. On a typical SME deal, this could lead to a 4-figure sum upfront GP. Not to mention still building the recurring business through traditional lines and calls.
Pros and Cons of inclusive handsets.
It’s easy to state the obvious benefit to an end user, not having to invest in hardware and a fixed monthly cost. There is also a benefit to the channel, a much easier sell. One price, all hardware included and all the hosted VoIP benefits to match.
Where is the con? Can limited cash injection from a deal put a burden on an organisation from reaching their growth targets? With every inclusive hardware deal it can take 36 – 60 months to receive the full value of the deal, versus on average 20/30% of GP upfront.
Also, end users can be averse to paying costly installation fees upfront, which can make it difficult for a telecoms organisation to cover the cost of their time for implementing new hosted users.
Does leasing give a fairer option for both reseller and customer?
With most hosted platforms now providing inclusive handsets, could moving back to a more traditional method help resellers earn GP upfront and the customer still receiving a fixed monthly bill, at the same price? Most importantly, a license price is significantly cheaper excluding a handset.
Let’s take a typical IP handset, costing £60 and an RRP of £100. Now let’s look at a hypothetical industry average, 10-user opportunity.
Leasing
- Total deal value over 60 months = £4140
- Total GP upfront = £900
- £0 upfront for the customer
Inclusive handsets
- Total deal value over 60 months = £3500
- Total GP upfront = £0.00
- £0 upfront for the customer
Byphone’s stance
Our ethos is providing the right solution to our partners and their end customers, matching our commercial arrangements to suit their business.
Thankfully we offer both of the above scenarios, and the majority of the time many partners can’t believe how easy it is to earn honest GP upfront while the end user still receiving a fair price.
