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What Will Your Customers Pay for Hosted VoIP?

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Tad NikolichBy Tad Nikolich

In my experience, customers looking for hosted PBX products want plans in the $10-$25 range per extension. My question for channel partners: Are many sales happening at the high end of that? Lower? How do you convince a customer that a service is worth a higher cost per seat? What type of customers might pay more for additional features, convenience and value?

Clearly, companies are spending — globally, the VoIP market is expected to reach $140 billion by 2021, with hosted PBX contributing a lion's share of the growth, says Zion Research. However, converting a customer used to analog or on-premises system pricing and equipment costs to a whole new set of price points requires sales collateral that stresses features over hardware.

First, let’s get a baseline of per-line spend now:

 

If you’re unhappily playing a volume game, maybe you’re not explaining the benefits properly.

Beyond Price

To bump spend above the $20 per seat average, you need to sell on value.

Partners have been selling the cost efficiency of hosted VoIP services for years. Because there’s no need to invest in physical equipment with a hosted solution, and phones are typically provided, spend is shifted from OpEx to CapEx. Analog phone lines can cost in the range of $20-$40 plus usage, and phone hardware systems are not inexpensive to buy and maintain. Premises-based systems also need software or hardware upgrades every few years and eventually go end of life. 

Contrast that with hosted PBX customers that simply pay an ongoing fee and rely on the vendor and/or partner for support. 

In my experience, clients often see value in paying a bit more monthly per extension to "future-proof" their systems, justifying that spend by eliminating service calls to repair, upgrade or replace systems. Free U.S.-based support is a big motivator. You’re more likely to get a higher price if your suppliers are continuously developing features for their platforms, which are in turn offered to customers without expensive and disruptive upgrades.  

If you want to get upward of $25 per seat, look for clients with customer-support departments or call centers, especially if they need complex routing, as you might have with call queues in an inbound sales environment. Businesses tend to pay more for advanced options such as CRM integration, click-to-dial capability, a web-based reception console, mobility, chat and SMS. Verticals with specialized needs are another lucrative market.

The challenge for some partners is how to convey these selling points to end clients accustomed to that $20 number. Use “soft" selling points, such as the fact that hosted technology will enable more efficiency for their staffs. Management consoles that streamline the operational tasks associated with a voice communication system are big plus.

Finally, remember that value is a two-way street. We had a private school approach us that required 30 phones but had very little usage. They were paying over $25 per seat for unlimited calling with their previous provider. We got the cost down to just under $13 per extension per month with a customized plan. This is a common scenario that partners encounter. Most hosted VoIP companies do not consider customer usage and just offer a "one size fits all" pricing plan. If you have customers with simple needs, make sure your provider will take the time to analyze current usage and customize a plan.

Please share your pricing experiences in the comments section below. How do you bump customers up on a per-seat basis? Or, do you do well focusing on volume?

Tad Nikolich is SVP of Business Sales at Voxox, an innovator in VoIP and unified cloud communication solutions for businesses. A proven sales professional, Tad has successfully built and led several top-performing sales teams. Tad understands and enjoys the technology nuances that underpin this rapidly evolving telecommunication industry.

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