Cloud-based Phone Service: The Next Recurring Revenue Frontier
Integrators can earn up to $10 in RMR from every client by installing cloud-based VoIP phones and simply reselling the phone service.
According to CE Pro’s latest Readership Study, 38 percent of integrators sell and install multi-line KSU (Key Service Unit) digital telephone systems with handsets, wire, jacks, a central control unit, and other hardware. But there is a very big reason that percentage might be about to grow: recurring monthly revenue (RMR).
As integrators explore multiple ways to earn RMR, they logically gravitate toward alarm systems, service contracts, remote network management, etc. But there’s a new RMR offering - cloud-based VoIP phone service - that just might be the easiest of them all to sell. These VoIP phone systems and services are not only less expensive than traditional PBX alternatives, but cater to the fact that residential and commercial customers both love to hate the phone company.
Panasonic is enabling this new RMR opportunity for integrators by recently establishing partnerships with two VoIP carriers: Jive and OnSIP, which both offer CE pros a portion of the monthly service. Panasonic’s new cordless and corded Session Initiation Protocol (SIP) phones, which were recently picked up by distributor Capitol, are designed to be more cost-effective than traditional models. The Ethernet-based units are expandable up to six handsets, each offering its own phone number. In large homes, the system doubles as an intercom.
Using one of the carriers, OnSIP, as an example, here’s how it works: The cloud-based phone system simply connects to the home network that most integrators are installing already. It’s just a simple IP address with each phone handset acting as an end point. The phone signals are being carried on Internet, just like cable modem and DSL-based phones. Instead of the homeowner or small business owner signing a contract with AT&T, Verizon or another large phone company, he signs up via the integrator for OnSIP. The monthly service starts at $29.95 per month with no long-term contracts… only month to month.
Homeowners can either choose to pay on a “per seat” basis (or per phone in the home), or a flat “pay as you go” plan that allows for unlimited handsets to be added to the system. Integrators earn 9 percent o 11 percent commission per month for per-seat sales, and 13 percent to 20 percent commission for flat rate pay-as-you-go sales ($50/month). Mike Oeth, CEO of OnSIP, says the pay-as-you-go model makes the most sense for large homes. That means integrators can earn as much as $10 per month per customer. OnSIP bills the client directly and remits the commission back to the integrator, so CE pros don’t have to worry about billing or collections.
One aspect that makes earning this RMR even easier is that as resellers of the service, integrators can actually sign up customers themselves using a special integrator log in. They pick the package and can even put in their client’s credit card number. That is a much simpler experience than what CE pros encounter with cable TV service, where the homeowner is often required to have the direct relationship with the cable TV provider.
Opening Up Down-market Clients
“The easiest way to describe it to a client is to ask them, ‘Wouldn’t you love to throw out Verizon [or some other provider] with a less-expensive service?’” says Oeth.
According to Andy Ogg, general manager at OnSIP, integrators can install a cloud-based phone for about $50 in labor per phone, the same labor manhours for a conventional telephone. However, these Panasonic SIP phones are only about $100 per phone with all the same capabilities of a high-tech PBX-based digital phone system that would comparably cost $50,000, he notes. So in a large home with 10 phones, that’s $1,500 for the installation, or about $48,500 less.
Granted, some CE pros would look at this alternative as something that takes a lot of money out of their pockets, but most would recognize that the market for $50,000 phone systems is limited these days. Also, it’s easy to wrinkle your nose at $10 per month, but many integrators recognizing the cash flow advantages of RMR, no matter how small, from services like remote power management.
“It requires a change in mindset for integrators,” adds Oeth. “Instead of getting the commission upfront from the sale of an expensive phone system, they can earn 20 percent of the monthly service for as long as the customer keeps the phone service. Plus, you can go downmarket and open up your services to a customer you would never have been able to reach with a more expensive option.”
The logic sounds eerily familiar to the mantra integrators already hear regarding selling entry-level stand-alone home automation systems to earn RMR vs. large integrated systems. OnSIP currently has 20,000 systems installed. Panasonic selected Jive and OnSIP as partners in February 2013 after reportedly vetting 400 different potential partners.
According to Curt Hayes, president and CFO at Capitol, it’s an area that integrators should feel comfortable with, noting that Panasonic offers a two-year warranty on the phones. “It’s just a simple IP address for each handset. The cloud is the KSU,” he adds.
Bill Savino, marketing manager for Panasonic Business Communications Solutions, says, “The cost savings and technological benefits of SIP phones are capturing the attention of end-users and businesses alike.”
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at [email protected]
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