Blog | August 14, 2012

VAR Margin Warning: Behind NCR Silver's Numbers

By Mike Monocello, editor-in-chief, Business Solutions magazine
Follow Me On Twitter @monocello

A couple weeks ago while at RSPA RetailNOW, I received a lot of positive feedback regarding my recent article on NCR Silver, an iPad-based mobile POS solution from NCR. As I wrote in that article, NCR was unable (or unwilling) to share details with me of how much a VAR could make selling Silver. Well, during one conversation at RetailNOW with a successful POS VAR who is an authorized NCR reseller, I was presented with some real numbers behind Silver.

Not only did this VAR have the numbers, he looked closely to understand how Silver could fit into his portfolio. Indeed, he took NCR’s margins and figured in his sales compensation model to determine that for a salesperson to earn a fair ($40k+) wage and for his company to profitably sell NCR Silver, a salesperson would have to sell almost 233 systems (which each include two Silver units for an average two-lane customer) per year.[pullquote]A salesperson would have to close nearly 5 two-unit Silver deals per week to earn a fair wage and make his company money."[/pullquote]

Or, broken down another way, a salesperson would have to close nearly 5 two-unit Silver deals per week to earn a fair wage and make his company money.

In fairness, this VAR’s salespeople might be getting paid more or less than yours. Or, his target margin might be higher or lower than yours. Regardless, I’d put this VAR very high up on my list of POS dealers who are running a profitable healthy business. In essence, a top performer. And, according to him, it doesn’t look like POS VARs stand to make much money selling NCR Silver. Rather it looks like a product better suited for a direct sale.

He also couldn't help but draw comparisons to an ECR solution using something like Sterling BRIDGE where VARs earn margin on hardware, services, BRIDGE, and get credit card residuals. To quote this VAR, "A reseller would conservatively make twice the money, provide a loyalty program to the customer, the customer still has internet access to financials/data, and the customers owns something no one wants to steal or surf the web with."

I’ll add one last thing to this article. In talking with others off the record at RetailNOW about NCR Silver, it appears as if NCR might still be refining, or defining, its sales strategy and VAR involvement. I welcome NCR's official word on how much a VAR stands to make selling Silver.

Until then, I guess the POS channel will have to stay tuned to see if NCR Silver is a solution it can sell, or have to compete against.

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