The top 3 ways VARs can boost their hardware margins

03/19/2020 | Hardware, Technology Education

Profit margins generally drive sales compensation. And when your solutions hardware matches your competitors’, it’s very difficult to keep those margins high. Instead, it becomes a race to the bottom as you and your competitors try to out-slash prices.

The result? Lower compensation for your hard work and less sticky customers. But there are ways to protect your margins as a VAR while ensuring that your customers get the solution they need. The strategies below will help you offer competitive pricing while preserving margin.

1) Propose Whitebox solutions

Whitebox solutions means you work with your hardware provider instead of competing directly with them.

You’ll also establish your own niche instead of struggling to stand out from the multitude of VARs offering the same hardware from Dell, HP, and Lenovo. Instead, with Whitebox hardware, your customers will get a unique solution with aggressive pricing, while you get a component partner who is invested in your success and not competing with you.

2) Work with supply chain

When working with Whitebox hardware you have greater flexibility to work with the supply chain team on component selection. This lets you and your customers optimize the solution for price/performance maximization.

Because you can select alternative components you can negotiate aggressively on individual component prices. And with lower-cost components, you can offer customers competitive deals on solutions while boosting margins by 20% or more, depending on the complexity of their configuration.

3) Work with sales engineers

Tier one hardware providers will try to lock you into standard configurations and pricing—unless you’re placing a huge order.

Instead, look for a hardware provider with a sales engineering team that will engage with you to optimize the solutions for price and performance. A sales engineering team will tailor the hardware to the customer’s environment on each project, pricing for their needs rather than just moving off-the-shelf configurations.

That means that your customers will trust you to offer them the best solutions while respecting their budgets. And in addition to building trust with your customers, cost-efficient hardware means you’ll wind up with higher profit margins to help your business flourish.

Want to learn more about boosting your compute and storage hardware margins? Contact our team here

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