Unfortunately, many system integrators express hesitation about attempting to make recurring revenue sales, like a technology-as-a-service solution sale, because they falsely believe . . . -
- They will have to wait to receive all of the revenue for the system portion of the sale. -
- They will have to internalize all of their cost to suppliers and distributors.
- It will take too long to build meaningful immediate revenue results.
Let’s look at an integrator technology-as-a-service sales example to show how all of these concerns can be avoided.
Assume a customer prefers a technology-as-a-service solution that includes a $50,000 technology system along with a $21,000 five-year maintenance and support contract. With the right financing partner, the integrator will be able to sell this solution for a payment of about $1,350 per month and the money flow will look like the following:
- The financing partner will bill the customer $1,350 for the next 60 months.
- The financing partner will pay the integrator $50,000 upfront. So the integrator earns their full intended revenue and margin on the system, just as if it was a cash sale, and the integrator is able to pay their suppliers just as they normally would.
- In addition, the financing partner will pay the integrator $350 each month for the next 60 months representing the $21,000 maintenance commitment that was bundled into a technology-as-a-service solution format.
The integrator benefits from the usual upfront revenue, the addition of recurring revenue, and a more engaged, long-term customer relationship.
When structured properly, recurring revenue sales are actually superior to a cash sale in every way.
For a deeper dive into the numbers and value, watch “Quantifying The Value Of Monthly Recurring Revenue”. (Coming Soon)
Learn more about recurring revenue here or check out the playbook for system integrators that provides a deeper dive into how to make the pivot to selling a service sales model and building monthly recurring revenue.