As a reseller, one might wonder why the reselling model will become extinct even though it still seems to be a sustainable model. A recent IT study shows that traditional reselling adds no value for customers when it comes to purchase perspective solutions and customers are starting to realize it. Some of the supporting reasons behind this are that:

  • Customers tend to pay more than what they are supposed to for a product and in turn they never have any added benefits or services.
  • Most resellers serve customers from larger organizations and they require extended support in case of an issue.
  • Reselling required products is never going to make for a sustainable business model alone; adapting as a VAR will make you thrive.

Why is the Hybrid VAR model effective?

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Instead of reselling a stand-alone product, reselling as a package along with product related services is what a value added reseller does. Vembu, analyzing the business possibilities of a reseller, came up with a proposal – the Hybrid VAR model. The Hybrid VAR model is a fusion of the VAR model and a MSP business model where the business possibilities of a reseller with a customer extends to a infinite period whereas the business period of being a VAR is finite for a short period (Max of 6 months).

How to bill your customers – Vembu’s Hybrid VAR model

As a reseller, your managed services contract should have these line items:

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  • Software license cost, X.
  • Installation, deployment and technician cost, Y.
  • Consulting and on-going maintenance cost, Z.

As a VAR, you will focus on profit margin from software license while providing added services as a complimentary for their pay at a low cost. In Hybrid VAR model, your focus should be on Y and Z cost values for profit. You should pitch your customers by providing a low cost value for software license which gets you the initial attention. With additional services provided as a package, customers willingly start their purchase.

While

  • X stays at low cost value
  • Y compensates and in most times will increase the actual profit margin you are supposed to get from software license

and

  • Z lets your business with the customer prolonged to a infinite period with consultation and maintenance costs.

You can witness the sum of X+Y+Z yielding a sharp increase in your profit and also prolongs your business tie-ups.

To learn more on Vembu partner program, click here Vembu Partners

 

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