How To Help VARs Adopt The As-A-Service Revenue Model

Posted on March 12, 2018 in Blog ,Change Management by

VAR insights

The as-a-Service revenue model has become a common delivery model for many business applications, but that doesn’t make it any easier when trying to convince VARs to utilize it. In this exclusive interview, Suzanne Davis, Director of Channel Sales at Harbortouch, breaks down the benefits of the as-a-Service model and offers advice on how the help VARs transition to it smoothly.

VAR insights

BSM: What is the biggest benefit to VARs/dealers of the as-a-Service recurring revenue model?

Davis: The as-a-Service business model delivers VARs with a stable, reliable, and profitable revenue stream. Instead of relying on one-time equipment commissions, dealers are able to earn recurring revenue every month. This eliminates cash flow issues or fluctuations in revenue since you get paid even if no new sales are made in a given month. With every sale, you build a valuable portfolio of merchants that provide ongoing revenue and have considerable value if you ever decide to sell your business.

BSM: What challenges do VARs face in shifting to this model?

Davis: Although many VARs have implemented as-a-Service solutions of their own, this decision comes with considerable financial risk. Typically, you must cover the cost of the equipment yourself in order to offer it to your customers with no up-front costs. It may take years before you start see a return on your initial investment. In addition to the financial risks, you must manage the operational changes required to make this shift.

BSM: How can VARs make the transition to this model as smoothly as possible?

Davis: The challenges of independently shifting to an as-a-Service business model are what make “free equipment” programs so appealing. This is essentially a turnkey as-a-Service solution that resellers can implement without any of the financial risk or operational headaches. VARs are able to take advantage of multiple revenue streams while quickly building a lucrative merchant portfolio. Partners can earn an up-front commission for each POS system sold and residual revenue on the payment processing, as well as the opportunity for additional recurring income by offering a service contract. The equipment, installation, training, sales support, and customer support are provided so partners can focus on signing up new accounts and building their residual portfolios.

BSM: What are the benefits of the as-a-Service model to a VARs’ customers?

Davis: In addition to providing a more stable revenue stream for VARs, the as-a-Service model also benefits your customers. This is because the as-a-Service model aligns the interests of the VAR with the customer. For the VAR to continue earning their recurring revenue, it’s critical that the merchant is up and running properly. If the merchant has an issue, it is in the VAR’s best interest to make sure it gets resolved as quickly as possible. This arrangement helps establish a long-term relationship between the merchant and the dealer that can also help with referrals and future business opportunities.

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