IT and Business Insights for SMB Solution Providers

Profit-Boosters for System Builders (that Anyone Can Employ): Page 2 of 2

System builders tired of low margins can get mad, get depressed, or get creative. Take a look at some of the latest techniques helping resourceful system builders--and other IT pros--pump up their profits. By Rich Freeman

Sell solutions instead of systems. Here's another great upselling opportunity: Offer prepackaged hardware bundles for popular solution types. For example, Equus noticed that many of its clients were deploying digital signage solutions. So it began selling digital signage solution packs complete with preconfigured servers and all of the necessary client hardware. Physical security bundles that combine custom server and client hardware with third-party video surveillance gear can be similarly effective at making small deals bigger.

Make peace with OEMs. Painful, but true: For some system builders in some situations, reselling client hardware from OEMs may actually be more profitable than selling your own wares, notes Fisher. The trick is to supplement such deals with deployment services, support offers, and other profit-heavy extras, she adds.

Partner up. Farming out large orders to the big dogs of the system-building world, like Equus and North Syracuse, N.Y.-based Seneca Data Distributors Inc., can be an equally counterintuitive path to higher margins. "Some of those guys can do 50 at a time or 100 at a time," observes Donald Young, who until recently was president of Terian Solutions LLC, a system builder in Houston. To fill an order that big on its own, Terian would have to hire additional employees, which would almost certainly wipe out any profit it earned on the sale.

Profit from experience. The big OEMs may be tough to beat on price, but they'll never know your clients better than you do. Tapping into that deep customer knowledge can help you grow your bottom line.

Such, at least, has been Patrick Taylor's experience. Though currently president of Atypical Business Inc., an IT consultancy based in Dallas, Taylor previously spent 15 years in the system-building trenches. Several of his clients were printing companies desperate to keep their presses rolling nonstop. Understanding that, Taylor offered them guarantees on the computers they used to run their shop floor--if he couldn't resolve a technical issue within two hours, he would overnight them a new machine free of charge. There was a cost associated with the offer, but customers rarely objected. "We understood what their real problems were [and] we actually created a solution," Taylor notes. "Most people are willing to pay for value-add."

Conversely, of course, no one likes paying for poor value, so whatever you do to grow margins, make sure it benefits your customers as much it does you. "The guys and gals who are going to stay in business are those who focus on building quality products," Toste observes. It's a deceptively simple insight that has helped keep Equus profitable every month for the last 20 years. "We don't want people to be upset with us," says Toste. "That's bad business."

About the Author

Rich Freeman's picture

Rich Freeman is ChannelPro's Executive Editor

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