voip resale

[peekaboo]

i'm considering becoming a reseller for voip telephone services.
it basically means that i will be buying plans/packages from a supplier and marketing them as my own.

i was wondering what you guys thought about this and any tips/warnings you may have.

[David M]

How is the competition? How is the profit margin? Seems the whole idea of VOIP is because it is cheap. Is it still cheap yet provides enough incentive to sell it?

[peekaboo]

there are a few little guys here (which i had to search for because i had no idea they existed) and a few big guys (mainly the 3 cable companies, vonage and another big one).
the price of the packages that i can get from this provider is pretty much comparable with what vonage offers (there's a worldwide calling plan that's better than what they offer).
if i sell for the price that he offers then i make a percentage (15%-30%, depending on number of customers). whatever i can charge above that is mine (but it's doubtful that i could price higher because of the competition pricing).
i'd have to set up my own website for the business and manage the customers (and marketing) but once they are subscribed, the actual telephone communication is provided by the provider and not me.

[EzyStvy]

If you also have to be the support contact -> Run Forest Run.

[peekaboo]

Originally Posted by EzyStvy If you also have to be the support contact -> Run Forest Run.

why?

[mbossman2]

things to consider:

• any "franchise" fees?
• who is the provider? - known? new to the market? new the industry? do they have references (agent and customer)?
• if they are "new" what is the source of their funding? how much? multiple waves or just a one shot infusion?
• Marketing? do they do any or is it all on you? not just advertising but also collateral - ranging from business cards to technical specs to slick glossies. who pays for all of that?
• who does the install?
• who does the support?
• who provides/sources the gear?
• who makes the gear(a known company or some mickey mouse outfit)?
• what is the gear?
• when does the reimbursement occur (for both the account/ongoing service as well as any gear that is purchased by the agent)?
• who owns the renewals, you or them?
• do they have their own sales force that you may/will compete against?
• what happens if you sell to someone on "their" list (commission split? you are SOL?)?
• what is the fee schedule (both amount and payment type - all at once or month to month)?
• Is install 1 fee and then an ongoing residual payment or is it all lumped together into the residual?
• what are the source of leads?
• does the provider provide YOU any support (both technical and sales)? if so does that affect the fee schedule?
• How many other agents are there? are sales territories clearly defined?
• are their any different fee "tiers" (for both customers and agents)?
• will you receive any training on sales, install and support?
• Is there a fee to take this training or is it something the provider gives gratis?
• are there any technical prerequisites?
• if you have to do the install, can you sub-contract that out or does it have to be your company?
• How much liability does your company assume for the service?
• How reliable is the network?
• "Pull thru" sales - you sell the service, what about any other gear the customer wants? phones, networking gear, software, PCs, printers, consumables and any non-phone related services. is all that revenue 100% yours or do you have to split this with the service provider?
• Who "owns" the account, you or them?
• Will the provider market other, non-agent eligible, products or services? competing or not and do you get a cut of that revenue?

agency arrangements can be quite lucrative, but they have to be approached carefully and with full disclosure of all fees, requirements and responsibilities.

Most providers are looking for folks who will actively market their service, not just to the agent's existing customers but also to new customer.

good luck

(yes, I have helped resellers become agents for several VoIP and line providers)

[peekaboo]

wow. excellent list of things to consider.
i do not know the answer to most of them.
i have a contract which i am going over now.

* any "franchise" fees?

yes, and this is the main thing holding me back. it's not really a franchise because i'll be using my own name and not the providers'.

* who is the provider? - known? new to the market? new the industry? do they have references (agent and customer)?

the provider is a friend of a friend/partner. claims to be in business since the beginning but i don't know if this is true or not. how can i verify how long a company has been in business?
i will also ask my friend/partner.

* if they are "new" what is the source of their funding? how much? multiple waves or just a one shot infusion?

provider claims not to be new. i don't understand the rest of the question.

* Marketing? do they do any or is it all on you? not just advertising but also collateral - ranging from business cards to technical specs to slick glossies. who pays for all of that?

i can choose to be their agent and then i just try to recruit for them (i don't want that). if i am a private label (which is what i'm considering) then i operate as a separate business and they simply provide the services. all my marketing would be up to me.

* who does the install?

me, but i believe the install is simply plugging the adapter into the internet socket and plugging the phone into the adapter. so it's pretty much a do it yourself kind of thing (unless you're really challenged). that's how it worked my vonage setup.

* who does the support?
i do the basics but if it's communications related then i pass it on to the provider.

* who provides/sources the gear?

i purchase adapters at a certain price from the provider and give/sell/rent them to customers. the price of an adapter is approx. half of it's price for consumers.

* who makes the gear(a known company or some mickey mouse outfit)?

good question.

* what is the gear?

as far as i know it's an adapter that connects your phone to the internet.

* when does the reimbursement occur (for both the account/ongoing service as well as any gear that is purchased by the agent)?

good question

* who owns the renewals, you or them?

me

* do they have their own sales force that you may/will compete against?

they provide service to customers and have other resellers so i will be competing with them (they are in florida and i am in vancouver, canada).

* what happens if you sell to someone on "their" list (commission split? you are SOL?)?

i don't know what that means.

* what is the fee schedule (both amount and payment type - all at once or month to month)?

to me or from customers?

* Is install 1 fee and then an ongoing residual payment or is it all lumped together into the residual?

what do you mean?

* what are the source of leads?

no sources. it's up to me.

* does the provider provide YOU any support (both technical and sales)? if so does that affect the fee schedule?

there is an option to have the provider handle support and i'll have to find out what that entails.

* How many other agents are there? are sales territories clearly defined?

i asked how many resellers he has and he did not want to reveal that information. he has no resellers in british columbia. i can theoretically provide lines for customers in india or anywhere else (if i can make them aware of my service) so we are competing for worldwide customers. any provider/reseller can provide service (and local lines) for customers i british columbia even if the are located somewhere else.
i want to be the only reseller in british columbia but there are other providers here which i have to compete with.

* are their any different fee "tiers" (for both customers and agents)?

not sure what you mean.

* will you receive any training on sales, install and support?

training on install. not sure about support and sales.

* Is there a fee to take this training or is it something the provider gives gratis?

no fee (but there is the "franchise" fee)

* are there any technical prerequisites?

don't think so.

* if you have to do the install, can you sub-contract that out or does it have to be your company?

i believe i can do whatever i want since it will be my own company (but i'm pretty sure the customer receives the adapter and just connects it).

* How much liability does your company assume for the service?

good question.

* How reliable is the network?

how can i check this?

* "Pull thru" sales - you sell the service, what about any other gear the customer wants? phones, networking gear, software, PCs, printers, consumables and any non-phone related services. is all that revenue 100% yours or do you have to split this with the service provider?

don't know

* Who "owns" the account, you or them?

me

* Will the provider market other, non-agent eligible, products or services? competing or not and do you get a cut of that revenue?

i believe he does not market any non-agent eligible products/services.
i do not get a cut of what he markets.

[mbossman2]

Originally Posted by peekaboo * if they are "new" what is the source of their funding? how much? multiple waves or just a one shot infusion? provider claims not to be new. i don't understand the rest of the question.

my question is how are they, as a business, funded. Putting together a NOC is not exactly a cheap prospect (and all sorts of warning bells should go off if they are doing it on the cheap). So who is funding the business? a venture capital firm? Rich, great uncle Leo? Who is/has invested in the company indicates the viability of the company and it's business plan. Most funding is done in waves: of $1 million potential investment - the company gets 20% at inception and then more as certain milestones are met. If they are in their last wave of funding that means thet may be successful - if it is in the 1st wave, the risk is much higher.

Originally Posted by peekaboo * who makes the gear(a known company or some mickey mouse outfit)? good question./

from their site, I have never heard of the manufacturer of their gear.

Originally Posted by peekaboo * what happens if you sell to someone on "their" list (commission split? you are SOL?)? i don't know what that means.

if a company has a direct sales force, they may declare certain customers as "off limits" or may react funny if they have called upon a customer and then you sign them. How that all works needs to be clearly defined.

Originally Posted by peekaboo * what is the fee schedule (both amount and payment type - all at once or month to month)? to me or from customers?

Both - are customers locked in via contract and are you paid your fee upfront (and the provider recoups this over the year) or are you getting paid after the
customer pays their bill each month?

Originally Posted by peekaboo * Is install 1 fee and then an ongoing residual payment or is it all lumped together into the residual? what do you mean?

Usually if there is an install, an installation fee is charged. Now that can be a seperate fee payble to you (say $100 per install) or is that fee rolled into the residual (monthly) payment?

Originally Posted by peekaboo * How many other agents are there? are sales territories clearly defined? i asked how many resellers he has and he did not want to reveal that information. he has no resellers in british columbia. i can theoretically provide lines for customers in india or anywhere else (if i can make them aware of my service) so we are competing for worldwide customers. any provider/reseller can provide service (and local lines) for customers i british columbia even if the are located somewhere else. i want to be the only reseller in british columbia but there are other providers here which i have to compete with.

I'd certainly want to know if anyone else has been actively selling this product successfully before I would jump in and I would want to have talk with one or more of them.

Originally Posted by peekaboo * are their any different fee "tiers" (for both customers and agents)? not sure what you mean.

Most agency fees have a sliding scale: sell 10 customers a month and you get 10%, the next 10 that month, the fee bumps to 12%, the next 10 after that 15% etc.
and this may be tied to how much the customer signes up for. Do you get more for signing someone to a $39 plan than a $29 plan (more that just 10% of $39 is more than 10% of $29)

Originally Posted by peekaboo * How reliable is the network? how can i check this?

ask for an independent 3rd party assessment of the network (most providers will have that available - serious business customers demand this kind of information.


as I pointed in via email: I would look into a more business to business (B2B) arrangement rather than consumer/residential sales as companies like vonage will
way out market you and have a better mindshare (and subsequent walletshare) than you and your company.

[mbossman2]

one other thing:

Remember, the biggest "name" in this arena, Vonage, has yet to turn a profit (http://finance.google.com/finance?q=VG) and isn't forecast to until 2008

[EzyStvy]

Originally Posted by EzyStvy
If you also have to be the support contact -> Run Forest Run.


why?

Imagine selling 500 phones and ALL 500 people call you 6 times each every week.

[David M]

After all that....I would say yes if you were selling something like diamonds, jewelry or some other sort of traditionally high profit margin product, but expecting to make enough of a profit to live off a low dollar item seems very questionable. The competition in all communications is fierce which means the margins have to stay low in order to to remain competitive. Nobody in communications is making big margins. Check the quarterlies if you want to see it for yourself.

http://www.smartmoney.com/marketmap/

You also have to ask, why would a company so easily offer a franchise? Could it be that the margins are so low that they do not think they can offer the product themselves and still make a profit?