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What Recurring Revenue Can Do for VARs in the POS Market

December 22, 2017

What Recurring Revenue Can Do for VARs in the POS Market

If you've been around the point of sale (POS) industry, you've probably seen what's called the break-fix model. Here's how it works.

A business owner invests significant up-front money in a POS solution. You receive a commission from the initial sale. Then some time passes. Your client calls and tells you that something in the system is "broken." You repair or replace that piece, and the client pays a one-time fee. Neither you nor your customer is very happy with your relationship.

But what if you could do things a little differently?

Consider a different scenario. You and your client work together to create a list of needs for POS services. You put together a solution-as-a-service bundle that includes hardware, software, training, payment processing, and regular upgrades. Your customer doesn't face high initial costs, just a predictable monthly payment. You deliver any needed updates and upgrades, ensuring the POS system operates smoothly and securely.

Sounds more like a mutually satisfying relationship, doesn't it?

And there are plenty of benefits you may not have considered, for both you and your client. Here are just a few.

Predictable monthly revenue. While commissions are nice, they don't offer value-added resellers (VARs) much peace of mind. On the other hand, recurring residual payments smooth out the ups and downs of the POS market. And your clients can get started with reasonable monthly costs and limited capital outlays.

Greater client retention. POS systems are central to merchant operations and success. And POS is an area most business owners want to "set and forget." When you enter into a monthly contractual relationship, you set the stage for a long-term partnership that can give your client a high degree of customer satisfaction. And you'll gain maximum profitability.

Stronger connections. When you can assist your clients with all aspects of the POS market, they begin to see you as more than just a salesperson. Instead you become the go-to resource for new business technology. And your customers think of you as their personal POS and payments consultant. With this strong connection, your clients are less likely to take their business elsewhere, and you gain stability in an often unpredictable market.

Increased business value. As a VAR, your business valuation is only as great as the value of your current clients. When the majority of your revenue depends on traditional one-time POS sales or the standard credit card terminals, your business will have a lower value. But those in the SaaS POS market will benefit from the value of residual revenues. And that means if you decide to sell your business, a strong customer portfolio will deliver a higher price.

As the POS market has become increasingly commoditized, business owners have trouble differentiating the value of similar products. But with the rise of hybrid POS offerings, you can position merchants for success with complete solutions that also provide you with ongoing and regular revenue.

How is your business model evolving with changes in the POS market?


Shea.jpgJeremiah Shea leads Ingram Micro’s DC/POS Payments Program and provides support for vendors like Verifone, Ingenico, Magtek, ID Tech, and Equinox. He has been part of the DC/POS division at Ingram Micro now for five years, working with all facets of the business for strategic execution. Jeremiah has also become the subject matter expert on EMV readiness and overall payments strategy. With a technical background and a sound understanding of the business, he is a great resource to tap for any and all questions relating to EMV, but more broadly anything DC/POS related as well. 

Phone: 1-800-456-8000 ext 64810 
Email: Jeremiah.Shea@ingrammicro.com