Posted by Sean Wilder

Like many other world class software companies, Fonality is beginning the transition to a subscription-based model.  Small to medium sized business love it because they prefer their communication solution as a flat monthly payment over a large upfront capital expense with unforeseen support and upgrade costs in the future.  Realizing the benefits of a predictable residual income for their businesses, channel partners are also eager to get in on the act, but the new model of earning profits over the course of a couple of years instead of 100% upfront can be a difficult transition to make.  

Grass_Growth_Chart.pngFonality is committed to helping its partners make the move to a monthly recurring revenue (MRR) model but only at a pace that causes the least amount of disruption.  Here are a few ways that Fonality is helping to make the transition to MRR virtually painless for its partners:

Flexible customer payment options.  In addition to offering a monthly subscription, Fonality solutions can also be offered as an annual payment or even an upfront perpetual software license.  These additional payment options provide opportunities for partners to collect more commissions or margins upfront.  Partners can also choose which payment option to offer on a transaction-by-transaction basis, so they can make the transition to MRR at their own pace.

Open hardware  provisioning.  Fonality offers its partners the option to provision phones and server components independent of the software subscription.  Partners can source the hardware from a distributor where they can make the most profit and offer it to their customers as an one-time capital expense, collecting margins upfront while offering Fonality software as a monthly payment to begin to build the MRR portion of their business.

Complementary services.  Even when a partner offers Fonality software and hardware as a monthly subscription, there are numerous opportunities to earn upfront profits.  LAN/WAN consulting and design, security policy consultation, router, switch and firewall sales, and inside wiring are just a few of the services that may be required for a successful UC implementation and are usually charged by partners in advance.

Partner compensation plan.  Fonality’s partner program was designed specifically with partners transitioning to MRR in mind.  When partners offer Fonality solutions as an agent, they receive an upfront bonus equivalent to one month of customer billing.  This payment can go a long way in meeting sales and operational expenses.  Partners can also purchase a Fonality monthly subscription at a discount then resell it at a profit to their customers each month.  This arrangement enables Fonality partners to be cashflow positive from day one rather than incurring a large upfront expense and making up for it on the backend.  Like the customer payment option, Fonality partners can choose to transact as an agent or a reseller on a deal-by-deal basis.

Subscription- and cloud-based software is here to stay and can offer an exciting opportunity to channel partners who embrace it.  Fonality’s unique products and partner program provides the opportunity to build an MRR business for the long term while still being able to meet short term obligations.