Selling Unified Communications for Pennies a Day

DATE: 2008-02-22, By Jessica Davis

Cisco moves closer to hardware-as-a-service with a per-user, per-day pricing plan that charges about as much as for a daily newspaper and includes upfront costs.

Do your customers like the idea of unified communications but balk at the upfront price tag? A new financing option from Cisco attempts to jump that sales roadblock by breaking down UC costs to a per-user, per-day price for the end user.

The program, announced Feb. 25, uses financing from Cisco Capital to create an HAAS (hardware as a service) model for selling unified communications to small and midsize businesses. VARs set the end-user price, and can use a calculator on the partner portal to determine what that price should be.

"If we break the price into monthly chunks, that's a much easier conversation than 'Could you write me a check for $30,000?'" said Brad Kowerchuk, president of Bralin Technology Solutions, a Cisco partner in Saskatchewan, Canada.

"I think hardware as a service is where we ultimately can go with this," Kowerchuk said. "Photocopier guys have known this for decades. You pay them a maintenance fee, cut them a small check every month. With hardware as a service we are really just going in those footsteps." 

Typically the per-day, per-user prices will be around the cost of a daily newspaper, according to Maryann Von Seggern, director of worldwide channels at Cisco Capital. Cisco showed some prepared examples of how the program could be implemented. For 22 users on a 36-month term, the price offered could be as low as 82 cents per user per day. On a 60-month term, pricing would drop to 62 cents per user per day. For 73 users a company would pay $1.15 per user per day for a 46-month term, or 86 cents per user per day for a 60-month term.

For more on Cisco's unified communications offerings for SMBs, click here. 

"We wanted to help our partners selling into the SMB space quickly get over hurdles [such as the belief] that selling a Cisco solution is too expensive," Von Seggern said. "So we asked ourselves, What if we could convert our user financing solution into per user per day?"

Von Seggern also said Cisco has found that customers that pay on a monthly basis keep their equipment for 40 months before refreshing, compared with 72 months for customers that buy the equipment outright. That means a faster refresh cycle for partners.

Navigating the finance maze 

To help solution providers navigate the financing side of the equation-one that many may be uncomfortable with-Von Seggern said Cisco Capital has prepared a series of five short education videos. One covers financing fundamentals, such as the difference between an operating budget and a capital budget. Another covers sales strategies, another features Von Seggern talking about the program and another is about how to navigate the program to make sure the provider will be paid quickly.

Kowerchuk said he has heard from Cisco Capital that the finance rates for the program will be "very attractive," making it a viable option for VARs.

Von Seggern said the new program builds on the recent success of Cisco Capital.

"Our global end-user financing volumes were up 74 percent for the first half of the fiscal year over last year, and in the United States and Canada that number is almost 100 percent," she said. In 2007, Cisco Capital touched a third of Cisco's revenues, a percentage that is on the rise, Von Seggern said.