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3 Ways Subscription Software Licensing Helps VARs Close Sales

May 10, 2018

Close up of piggy bank and coins stacked on desk to illustrate the cost savings of software licensing to value-added resellers of point of sale software.

In recent years, the subscription model has been eclipsing the traditional one-time, perpetual-license model for software licensing. Retail point of sale (POS) providers and other value-added resellers (VARs) take note: incorporating a subscription program into your business model can provide attractive benefits for both you and your customers, today and in the future.

Recurring Revenue for Your Business

In the traditional model of software licensing, customers pay a single, upfront cost for the perpetual right to use the software, which is usually installed and maintained on-site. The VAR gets a percentage of that cost, and overall income depends on the number of new sales generated — which can fluctuate. But with a subscription model, customers are paying smaller monthly or annual fees to keep using the software and the VAR gets a commission on each payment over the life of the subscription, which can extend for years.

While this percentage earned on subscriptions is smaller than traditional sales initially, overall revenue grows steadily over time. You’re creating a predictable income stream, which gives you the assurance that you’ll be able to meet your payroll, and have capital to invest in hiring additional employees, training, and other activities that will improve your business. You won’t be as dependent on constantly finding new clients, so some of the resources you would normally spend on customer acquisition can be reallocated. And when you are seeking new customers, subscription software licensing provides great incentives to help close the deal.

Attractive to Your Customers

  1. Easy Management: Software support is included with the subscription price, including automatic updates and the most up-to-date security patches. In addition, customers know everyone in their organization will be working with the same, latest version of the software.
  2. Ability to Scale: Subscription programs provide greater flexibility for clients to scale their service as their businesses grows. Some software vendors also allow the development of custom applications (which can be an additional source of revenue for the VAR).
  3. Affordability: Traditional software licensing involves a hefty upfront investment, which can scare off some clients. Perhaps the biggest advantage of subscription licensing is that it offers the full benefits of the software, but with a smaller, more manageable cost. This alternative is especially appealing to the budget-conscious small to medium-sized businesses (SMBs).

Grow Your Business

The benefits of a subscription program for your customers make it easier for you to sell, thereby helping you to grow your business. Every sale will be providing a steady stream of revenue beyond the initial signing commission. You’ll have the opportunity to strengthen your relationships with clients, as your business will be top-of-mind with each billing cycle. This continued connection will position you to pitch additional solutions and services, generating even more income. It boils down to this: provide your customers with the tools they need to grow their businesses, and their success will result in continued revenue for you over the lifetime of their subscription.

TallySoft’s POS software, TallySales, provides VARs with a powerful combination of subscription services and enterprise-grade features that help close sales for customers in a wide variety of niche verticals in the retail industry. Learn more about TallySoft’s reseller program, and consider adding TallySales to your line card.

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