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Mar 28

2017

Step 3: Develop Your Pricing Model

Step 3: Develop Your Pricing Model

This is part 3 of our 8-part blog series, 8 Steps to Help Channel Partners Build and Execute a Profitable Cloud Business.

When it comes to pricing, the bottom line is to think about the future. How easily and cost effectively can you manage the operation of your cloud solution — and how can you cut the operational costs of manual processes by automating invoicing, provisioning, purchasing, subscription management, and reporting? It all starts with building a scalable cloud solution in Step One that will align with your business growth and revenue goals. Here are two key best practices to help you ensure that the price is right:

Understand your cost basis

You need to understand what your cloud solution will really cost before you can price it. It’s a red flag if you are basing the cost of your solution only on what you are paying for the basic technology. Be sure to factor in the cost of doing business with your partners, operational costs for management and provisioning of services.

Consider operational costs and automation benefits and model for future scale

These two best practices go hand in hand in creating a cloud model for optimized profitability. One of the biggest mistakes a partner can make is building a solution that is not scalable for future growth and change. Not automating certain operational processes is another red flag. Often a partner will price their solution without realizing all of the operational “touch costs” that can escalate and eat up profits. For example, if your cloud solution has five vendors, you may need one or two extra full-time staff just to provision and manage each service each month, plus deal with invoicing and other paperwork from hundreds — maybe thousands — of end users. Automating these manual processes can reduce operational costs and add to the profitability of cloud sales.

Other things to consider when developing your pricing model are:

  • Utilize value-based pricing methodology
  • Research market price for anchor vendor
  • Factor expenses related to services delivery costs
  • Leverage volume discounts
  • Develop promotions and trials
  • Consider volume pricing tiers

You’ve built a scalable cloud solution, chosen the right vendors, and have a pricing model in place that can adapt to future changes. What’s next? Read on for Step 4, where we’ll discuss the advantage of establishing KPIs to help you best determine — and meet — your revenue goals for cloud sales.

For more information about Ingram Micro Cloud’s channel partner program, visit www.ingrammicrocloud.com/become-a-partner/.