eFolder Webinar, Three Secrets to Pricing and Packaging Your BDR


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Join eFolder partner Erik Thorsell as he shares his secrets to pricing and packaging a BDR offering. Erik is the founder and President of Success Computer Consulting in the Twin Cities. He has built a thriving managed services practice through a combination of smart partnerships, intelligent pricing and packaging, and a winning approach to sales compensation.

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  • Hello. My name is Ted Hulsy. I am Vice President of Marketing at eFolder and your host for today’s event.Welcome to the eFolder Partner Chats. This webinar series brings together leading eFolder partners for business oriented discussions.Today we are joined by Erik Thorsell, President of Success Computer Consulting. In just a moment, I will further introduce Erik.
  • Before we go through the agenda, let’s cover a few house keeping items.Today’s session is being recorded. The recorded version of the webinar will be made available on eFolder’s YouTube channel. We will also make copies of the slides available those who attended the event.With over 150 people registered for today’s session, we have put all participants in listen only mode. You can enjoy the audio portion of today’s event by either streaming it your computer or by dialing in over the phone. Questions are strongly encouraged throughout. We have planned a special Q&A section at end of today’s discussion, but you may submit as we go along and we will try to address your questions on the fly.First, Erik is going to give a good background on Success Computer Consulting and how they have successfully grown their BDR franchise over the past few years. Next, Erik is going to share the keys secrets to his company’s success. And lastly, we will have plenty of time for your questions during the Q&A section.
  • Now let me introduce today’s guest:Erik Thorsell is founder and President of Success Computer Consulting. He started Success Computer Consulting in 1992 in a spare bedroom of his home. Originally serving large companies, Erik decided to shift his focus to small and medium-sized organizations.  He knew that if he brought his corporate experience to these clients, he’d be able to develop a service offering that really made a noticeable difference to them. Today, more than seventeen years later, Success Computer Consulting's talented team is based at its Golden Valley, MN headquarters. SCC’s clients include small and medium-sized businesses, non-profit organizations, and educational institutions. Erik, thanks for joining us and welcome.
  • Story of my career – music education, Pillsbury Doughboy, American Express and SCC – no business being in I.T.Like many business owners, learn from my failures and mistakes – and if you’ve met me, you know I fail BIGTIME – so I don’t pretend to have “the secret” – but I hope that, by sharing, you might find a new way to think about backup/disaster recovery in your business.Although we have 35 people today, we only had 12 people six years ago – changed strategies and decided to grow in 2006 – HTG, vendor partners like eFolder, others helped us learn how – mostly, though, we had to just try thingsHTG focuses on execution and accountability. The HTG leadership quotes Thomas Edison – “Vision without execution is hallucination.” To me, it means my words are useless if I haven’t taken action. Constant challenge to me. And so, I want to begin by challenging you. If you hear an idea today about how you can build your BDR business or, better yet, if you think of a BETTER way than what you hear today, I challenge you to execute. Thinking about something is NOT execution. Deciding to do something in the future is NOT execution. You see, if you execute, than I can listen to YOUR story next, and find my own ideas to borrow!Our business shift – historically SBS boxes; last four years, decided to try to swim upstream a bit– to networks with 75 to 500 users; folks who have internal IT staff most oftenWe still get new small business clients, too – so we’re still in the trenches with products like SBSAnother shift – our managed service offering. Used to be a price-per-device “all you can eat” model – the traditional managed service pricing strategy. We failed. We weren’t profitable. Kept spending more time than we thought we would, and couldn’t get it under control. So, we switched models. As a result, our managed service offering (and it IS still managed service – we still are proactive, and our interests with clients are still aligned) is priced on an a la carte model. You’ll see why that matters in my upcoming slides.
  • So, thought I’d share a few vital statistics about our business. I don’t make the claim that these are good or bad, high or low….they’re just the numbers. That said, I’m REALLY happy with them. Particularly our BDR gross margin of over 75%. Highest gross margin of ANY product or service in our portfolio.That’s good…but the fact that it’s predictable, reliable, monthly recurring revenue for our business is awesome. Our BDR business’ gross profit covers the total cost of all of our employee benefits, including health insurance, each month. In a way, BDRs make it possible for me not to worry about how I’m paying those bills anymore. So, if our results are consistently like those…and they are….then we are aggressive about protecting that business and its profitability. So, I want to share the strategy we use with selling BDRs to clients, but first some general thoughts about our managed service business.High margin offerings might have a competitive “bullseye” on them. Everyone sells BDRs these days…so if my local competitors are on this call, someone might decide to call our clients and sell against our margin…but know that we thought of that already. I’ll talk about how we try to protect ourselves from price competition.Our business is a relationship business. Our clients work with us because they trust us to be knowledgeable and honorable and because we deliver value to them. Is high margin honorable? Absolutely, and I wouldn’t lie to a client about our margins. Our clients know that they pay us a price that is FAR less than the cost of not buying our services…and that’s who they compare to. So, we have competitors…but we have NEVER experienced price competition on BDR’s in the marketplace, so we don’t base our pricing on what the other guy might do.It is important that we understand how profitable each of our product lines is, and that we manage to profitability goals. So, each time I sell a PC/laptop, I try to make sure that this sale doesn’t lower the average margin. Same with BDR’s. Our profitability here didn’t happen by accident. It was a conscious decision. We decided to make a profitable BDR practice here. I think that’s an important thing to consider. Don’t make pricing decisions DURING a proposal…make them in advance, based on your business needs.
  • Discuss SCC assessment processMicrosoft Assessment and Planning (MAP) Toolkit – includes sample assessment/sales questionsWe tell C-level business leaders we wanna talk…and not about bits and bytes – we want to talk about what they know best: their own businessWe ask who they are and what they do. We ask how they plan to grow, and how much. We ask them to talk about their competitors and how they compare – and how they compete. We also ask them about technology, but from THEIR perspectives: How does technology make them better than competitors? How could it? What competitors are role models to them with technology? What other businesses are? Why?Then, we ask about pain and problems.No small business network is designed with the idea that it will eliminate 100% of downtime. Too cost-prohibitive. Yet sometimes our clients think that a 30-minute outage means that someone did something wrong! Our job has to be to help clients realize that they’re not buying a perfect system – they’re buying the RIGHT balance of performance, fault tolerance, security, flexibility and reliability for their budget…but they can’t buy perfection.With that in mind  tolerance for downtime conversation. Happens at worst possible timeMaximum tolerable outage in weeks/days/hours/minutes for each systemCost of an hour of downtime for this system (if they had to guess)Way to frame the customer need: You need a system that can deliver reliability in alignment with your tolerances, which are… Is that correct?
  • First of all, what are our costs when selling BDRs?Hardware acquisition costTime/labor to install, test, and seed the base imageMonthly costs for off-site storage, licenses, etc.If we want a high margin, we cannot afford to give anything away. And frankly, there’s value in the hardware. There’s value in our installation services and testing. And, of course, there’s value in off-site storage and the monthly fees. SO DON’T BE AFRAID to charge for the value you provide. Here’s how we charge:Whatever the acquisition cost for the hardware, we charge that to clients as our “installation/setup” fee. Does the client own the equipment? No, we do. Why is that important? Gives us flexibility to provide more value in the future without selling again…we can substitute a different box, or different solution, and the client doesn’t care about the hardware. Also, makes the relationship stickier. To leave us, they have to buy the BDR from us.Whatever the monthly costs are, we triple them…at least. Here’s an example from this week…just got the signed agreement this morning…
  • Here’s the eFolder pricing worksheet that our salesperson used for the deal we signed this morning…Show one-time cost and monthly cost
  • Here’s a clip from our managed service proposal, which includes the Advantage Point Standby Server.You can see we actually MARKED UP the hardware and made margin on it, too… and then we also more than tripled our cost on monthly items.Client is a small organization. Single server, just about 10 users. Signed for $450/month.Now, when I mention adding options:Quarterly virtualization test – charge by the hourQuarterly restore / recovery test – charge by the hourDisaster recovery planning – a BDR alone is NOT a disaster recovery plan – it is only technology – we use the BDR sale as a springboard to talking about development of a disaster recovery planBDRs can “pull through” more work! Don’t leave it on the table. Our clients expect us to sell this to them…and we do it by providing value, not a product.
  • I already talked about pricing based on value…How much does downtime cost? In money? In lost opportunity cost?These conversations are NOT baloney. Network outages, data loss, disasters cost real money to real businesses. It’s not just theoretical. Think about what clients have had to pay you to “save their bacon” when they didn’t have adequate protection in place! What if they could pay the same, but on a predictable monthly schedule, to AVOID those problems. You are providing value.Secondly, if you are worried about how your competitors are pricing BDR’s, you’re missing the point. If you’re providing value and great service, your clients are usually not talking to anyone else.And really, are all BDRs the same? We don’t think so. We are in the process of replacing all of our old Zenith BDR’s with eFolder BDR’s. Remember, we own all those Zenith BDR’s, and their value is on our balance sheet as a fixed asset. It took some guts to write all that off – to essentially say that those assets are worthless… but we felt we could no longer sell that brand with a clear conscience…because we weren’t sure we could keep our promises to our clients. So, if someone is selling a lesser product…or is selling an unproven product…or is selling some “cloud-based” backup option…is that really the same thing? We shouldn’t let our clients see these things as equal – they’re not. And that thinking starts with US….we must recognize that some vendor partners are better than others, and allow us to deliver a better experience to clients. So, if a client has a quote for a BDR that’s half the cost, my guess is that they’re selling a “lesser” model or brand…or that they don’t have expertise to deliver real value. Sure, it costs less now…but how well will the recovery work?This strategy for pricing, by the way, is the same for us with any HaaS/SaaS offering. We use it for security appliances, BDRs, antivirus licensing, too.Finally, and this is unpopular advice… but my experience is that we managed service providers are great technology people, but we make rotten actuaries. If I wanted to be an actuary, I would have stayed at Ameriprise! Take the risk out of your pricing. Charge for the value you bring. Just a thought…
  • This diagram provides a simple overview of the main functions of an eFolder BDR installation.First, the imaging software running on the production servers captures an initial image of the server, along with incremental image backups, and stores them on the eFolder BDR.The eFolder BDR appliance acts both as a storage server and as a standby server, in the event the production server fails. The eFolder BDR, leveraging virtualization technology, can bring up the image of the downed server and operate just like production server. Since both the data and complete server configuration is backed up, this on-site recovery can happen in minutes, not hours or days.To deliver additional protection, eFolder backs up the server images daily to the eFolder Storage Cloud, providing cloud based protection from on-site disasters. The client or partner can recover the server images from the cloud, via a download or shipment of a hard drive with the server images.Or, partners may elect to recover the servers in the cloud with the eFolder Continuity Cloud. This approach provides the same benefits of on-site virtualization, but instead leverages the eFolder Continuity Cloud.
  • [Ted will close out the last two slides, before formal Q&A]eFolder helps partners adapt to a fast changing technology landscape. Partners can leverage the power of the cloud, while managing the natural migration of infrastructure from on-premises to cloud-based deployments.With eFolder’s unique business model, partners control the client relationship. eFolder allows partners build unique and differentiated offerings, with your own service levels, pricing, and branding.eFolder partners create thriving businesses based upon managed services that generate predictable, monthly recurring revenue. Partners are able to keep their operating costs low through reliable service performance, automation, and integration with their PSA systems. And the result is consistent ongoing profitability.
  • If eFolder sounds right for you, contact us today. Qualifying VARs, solution providers, and MSPs can try any eFolder service at no cost.Thank you for joining us.
  • eFolder Webinar, Three Secrets to Pricing and Packaging Your BDR

    1. 1. Three Secrets to Pricing andPackaging Your BDR Service Ted Hulsy VP of Marketing, eFolder 415-235-6087 ehulsy@efolder.net Erik Thorsell President, Success Computer Consulting 763-593-3000 erikt@sccnet.com
    2. 2. Agenda• Introductions• Pricing and Packaging BDR: – More about SCC – BDR Sales Strategy – Three Secrets to Pricing and Packaging• Q&A2 © 2012 eFolder, Inc. All Right Reserved.
    3. 3. eFolder Partner Leader: Erik Thorsell3 © 2012 eFolder, Inc. All Right Reserved.
    4. 4. Success Computer Consulting• President of Success Computer Consulting – www.sccnet.com – Minneapolis, Minnesota – In business since 1992 – 35 people, 22 engineers/technicians – HTG – member (six years), facilitator (four years)• eFolder Partner for since 2006
    5. 5. SCC’s BDR Managed Service Offering• 113 managed service clients – 71 BDRs in production (63% of MSP clients) – Protecting 327 servers and over 4,500 users – Over 90% of new clients get a BDR• BDR gross margin in 2011 = 75.7% – In other words, cost = 24.3% of the selling price – Our most profitable offering
    6. 6. Our BDR Sales Strategy1. Understand client needs in their terms2. Unbundle the offering and build on it3. Protect the margin (minimum 66% per deal, down to 50% with manager approval)
    7. 7. 1. Understand Needs in Their Terms• Ask clients to explain their expectations• Ask them to quantify tolerable downtime by key application/function• Ask them to quantify cost-per-hour of downtime• Don’t sell BDR features/performance specs; respond to the client’s needs directly!
    8. 8. 2. Unbundle and Build• Give clients ultimate flexibility• Add periodic services that clients will pay for• Own the equipment right away, and have the client pay for it
    9. 9. 2. Unbundle and Build
    10. 10. 2. Unbundle and Build
    11. 11. 3. Protect Margin• Price based on value• No assumptions about competitive pricing• Insist on high margin in HaaS offerings• Avoid all-you-can-eat
    12. 12. eFolder BDR eFolder BDR eFolder Storage Cloud Image backupProduction Disaster recovery options BDR appliance servers 1. Download On-site virtualization 2. Disk shipment eFolder 3. Emergency in the cloud Continuity Cloud virtualization and recovery Users 12 © 2012 eFolder, Inc. All Rights Reserved.
    13. 13. Partner Pricing Please call eFolder for partner wholesale pricing details: 800-352-0248 www.efolder.net/join13 © 2012 eFolder, Inc. All Rights Reserved.
    14. 14. eFolder Competitive Advantages • Leverage the power of the cloud Adapt • Manage the migration from on-premises to cloud services • Your own service offerings Differentiate • Your own pricing • Your own branding • Predictable, monthly revenue streams Thrive • Low operating costs • Consistent margins and cash flow14 © 2012 eFolder, Inc. All Rights Reserved.
    15. 15. Contact Us Phone: 800-352-0248 Email: info@efolder.net Web: efolder.net Blog: efolder.net/blog/ Twitter: twitter.com/eFolder15 © 2011 eFolder, Inc. All Right Reserved.
    16. 16. Q&A
    17. 17. Appendix
    18. 18. eFolder Continuity CloudCustomer Site or Temporary Site Publicly Available Services (HTTP(S), SMTP, POP, XML/RPC) Private IPsec Virtual Firewall Firewall IPsec Tunnel LAN Internet PPTP Tunnel Traveling VPN Passthrough High Performance Computers Private Storage Cloud Continuity Cloud Compute Node Continuity Cloud Compute Node RDP Management Powered by Hyper-V, VirtualBox, and Powered by Hyper-V, VirtualBox, and Windows 2008 R2 Datacenter Edition Windows 2008 R2 Datacenter Edition 18 © 2012 eFolder, Inc. All Right Reserved.
    19. 19. Proactive Data Integrity Checks Decryption and Transmission via Encrypted Verification Verification Network Tunnel over Public Internet and Reassembly Encrypted Transmission Your Data, Your Encrypted Data Cryptographically + Checksums Verified + Digital SignaturesData Verification and Reassembly during DownloadData Protection and Duplication during Upload Encryption Encrypted Transmission via Encrypted Verification Transmission and Duplication Network Tunnel over Public Internet Your Data Your Encrypted Data + Checksums + Digital Signatures 19 © 2012 eFolder, Inc. All Right Reserved.