During the past 10 years, I have been fortunate to have the opportunity to meet a large number of computer resellers and discuss their individual recipes for success. With the fierce competition and skinny margins in our industry, the smart reseller must seek out and exploit all opportunities to increase profits.
Here are the top 10 ways (with no assistance from David Letterman) for a reseller to increase the bottom line.
10. Seek the agency model
Align yourself with a master reseller or distributor who can help you reduce your infrastructure. Carrying inventory and accounts receivable are the biggest headache, and often the chief reason, for business failure for a reseller. Today, there is an opportunity for resellers to have their supplier of computer products carry the inventory and, in many cases, the accounts receivable. The reseller places the order and receives their split of the profit margin. Besides saving on the carrying costs of inventory and accounts receivable, there are also savings in the brick and mortar, administrative personnel, sales tax reporting… and headaches.
9. Utilize Leasing
The average computer reseller earns an extra three to four profit points on a lease as opposed to a sale on net 30-day terms. Most major leasing companies allow resellers to broker the lease rate. Every computer sold should be quoted on a month-ly lease in addition to a net 30-day purchase option. Often a reseller is able to sell more if the buyer is able to stay within their capital budget parameters. In addition, leasing encourages add-ons and helps protect your customers from the competition. Further, most resellers can obtain a higher credit limit from their distributor if the order placed is for an approved lease.
8. Charge More for Constrained Products
Remember “supply’ and demand” back in Economics 101? When supply decreases, demand increases. Are you charging all your customers a standard mark-up? Customers will expect to pay more for products that are in short supply When pricing out your proposals make sure that the current industry-wide availability of the products are taken into consideration.
7. Establish Software Solutions
There is more profit to be found in software than in hardware. Software solu-tions should be established for the industries that you are selling to. Seek out VARs who have the best software available, determine if you can be authorized to sell that software in your local market. Have your staff trained and develop a profit margin split or finders’ fee commission with the software providers. Maintain a catalog by industry. It is often easier to lead with the software solution before selling the hardware,
Tags: headaches, model, products