Recurring revenue is quite the priority lately. It is not new, but if you read the narrative of most technology solution provider's financial statements, you'd think it was. Why?
So how does a VAR or integrator represent a monthly recurring revenue model and meet the net 30-day requirement on the equipment/hardware?
It requires intensive capital, asset management, UCC filings, credit decisions, billing, and of course the glamorous world of collections. So unless the integrators have all those areas of expertise and a boatload of capital, growing through recurring revenue seems unlikely.
Companies who try to accomplish the recurring revenue model through traditional monthly payment options like $1 buyout or fair market value leasing face challenges. Unfortunately, the way a monthly payment option ends is counter intuitive to a recurring revenue model. Take a capital expense (CAPEX) monthly payment option like a $1 buyout. At the end of the term the customer owns the equipment, but not the service or subscription. And traditional operating expense (OPEX) monthly payments are flowered with fair market value (FMV) options at the end or return. Both payment types are unaligned with recurring revenue and possibly unbundle a key component of the monthly stream.
So how can solution providers successfully sell to increase recurring revenue?
It will be impossible using the existing sales strategies, tactics, and tools. At a minimum, they will need:
TAMCO does exactly this. Help you align the technical and financial parts of your sale and support you in this shift so you can start building your recurring revenue and increasing your profit margins. Learn more about our partnership here or download or eBook: 3 Ways TAMCO's Partner Program will Create Recurring Revenue for Your Technology Solution Business.