Hosted PBX vs. Premise Based PBX
When we first engage with a prospective new partner and describe our White Label VoIP service, which enables providing private label dial tone to end users through either a Hosted PBX or SIP Trunks to a Premise based PBX, more often than not the potential partner has a singular focus on Hosted PBX. The conversation becomes a debate over which technology Hosted or Premise PBX is better. For many who have been selling Premise based systems this is a conversation filled with emotion. The reality is that both are good technologies and more importantly it is not relevant to the value proposition that White Label VoIP provides. White Label communications enables their Partners to become their own phone company. No longer do you, the technology integrator, do all the heavy lifting winning the customer and building a relationship of trust only to turn over the most lucrative piece of the voice business; Dial Tone! This is where the high margin recurring revenue lives. For decades the Teir 1 providers have strolled in after the sale and brought in their dial tone. And maybe, just maybe, gave you a finders fee or a small ongoing residual; a residual that they can elect at any time to stop paying you.
The transformative values of White Label VOIP technology provided by White Label Communication include:
- Own your customer end to end
- A service offering that you can mass market; no more waiting for someone who needs a technology refresh
- Control the provisioning and management of your service
- Capture high margin recurring revenue
- Increase both cash flow and shareholder equity
We are amazed on a daily basis the numbers of Interconnects and MSPs we talk to who have spent decades building their brand in the business community who fail to recognize the immense opportunity that White Label VoIP brings to them. Their business has them locked in a lower margin, project oriented, feast or famine model. They compete in a crowded market and fight to win a customer. The fruits of that labor is a onetime sale and nothing else meaningful to sell that customer for another decade. Not since the internet explosion in the early 90s, that enabled local providers to create margin rich recurring revenue and huge valuations for their companies, has there been such a transformative opportunity for small business.
It is often typical when a market has a significant shift, like the voice market is experiencing with the introduction of White Label VoIP, it represents a squeezing of margins for companies in the industry. Fortunately White Label VoIP is not typical. For those whom make the shift the economics could not be more appealing. Upwards of 70% margins on a recurring revenue basis are there for the taking for those who can effectively position their service in the market. So essentially you have an end to end sticky service offering, which is recurring revenue at high margins, that leverages the brand and customer base you have built, and the skill set that you have perfected. Then why do some organizations elect not to move their business model in this direction.
That my friend brings us full circle to the Hosted PBX vs. Premises based PBX discussion again. Those who have trouble grasping the implications of this industry shift typically are stuck focused on the question which technology, Hosted PBX or Premise based PBX, is better. The reality is that this is not the question at all. The question is how is the customers expectation evolving. And the answer is they expect to buy a phone service not a phone system. If you want to play in the voice market long term you better align yourself with that shift. The good news is for those who get that and align themselves there is “gold in them there hills” for those who don’t you are going out of business and you probably don’t even know it.