For many years, your customers had to decide whether or not they were going to use their own cash to buy new technology or if they needed to go to the bank. Today the landscape is much different and business owners are making technology decisions based on whether the solution is a capital expense or an operating expense.
The world of managed services and cloud is changing the industry, and companies are increasingly asking to consume all of their technology monthly. Billing the customer monthly for services makes a lot of sense, and it’s what many MSPs have been doing for years. The hardware is a different story.
As Expert Technology was making the transition to a hosted solution, they say they saw two options for selling the hardware, and neither was ideal.
1. Self-finance the hardware and rent it to the customer.
- Pros: One invoice for the customer, higher margins, easier to upgrade customers
- Cons: Restricted cash flow, administrative costs of invoicing and collections
2. Lease the hardware through a third-party finance company.
- Pros: Easy to upgrade equipment, administrative costs covered by finance source, frees up cash flow
- Cons: Customer receives two invoices, ownership options at end of term
Expert Tech thought there could be an easier way, and it just took some creative thinking for us find the best solution for them. Enter option 3: Hardware as a Rental (HaaR).
Through a customized version of HaaR, GreatAmerica is financing the equipment and allowing Expert Tech to put the equipment charge on their invoice and pass back the equipment charge to us monthly. Expert Tech tells us they are getting the best of options 1 and 2 while avoiding the multiple invoices and restricted cash flow.
By Jackie Schmid, Director of Strategic Marketing of the Unified Communications & IT Group at GreatAmerica Financial Services
Jackie Schmid is the Director of Strategic Marketing of the Unified Communications & IT Group at GreatAmerica Financial Services located in Cedar Rapids, Iowa. Jackie is responsible for building brand awareness and gaining strategic relationships through creative marketing. Prior to joining GreatAmerica, Jackie worked in the TV News industry as a producer and executive producer at the local CBS and FOX stations where she helped shape the programs delivered to the market. Jackie’s finance career began in 2011 when she joined GreatAmerica to support the sales team serving the Office Equipment space.
Want to learn more about packaging and pricing your IT services? Check out this tipsheet.