As a business manager, you lead the fight every day for sustainable profitability. You spend much of your time devising ways to stay profitable on shrinking product margins and rising labor costs. You have one good project and then a bad one, and the cycle repeats. In the end, the blended gross margins on your installation work is likely to be somewhere between 20 and 30 percent. After making payroll, paying suppliers and normal business expenses your net profit can be 10 percent or less. Sound familiar?
Transitioning from Products to Services
Many integrators have concluded that product and installation revenues alone are not sufficient to support a healthy organization in the long term. Following the lead of the IT Integrators who made this transition in the 1990’s, smart integrators are moving from an installation to a service focus. Services offer several distinct advantages over simple installation revenue. Services provide the opportunity for higher gross margins, less risk, higher customer perception of value, more impact on the valuation of your company and an increased opportunity for repeat business. These are all great reasons to be focused on building service revenue.
Want to read more? Download the complete white paper below.