Service providers could improve margins on their UC offerings by switching their business model to a per session pricing alternative.
Talking exclusively to UC Today, Jason Byrne, Vice President of Product and Marketing at Netsapiens, said that for many service providers, when they sign up an end user business, they charge by the seat but they are also purchasing from their UC vendor by the seat. This means the service provider is in a cost-plus model.
Byrne said his company has taken a very different approach from the very beginning that would be more lucrative for service providers. For Netsapiens, oversubscription was a way to differentiate itself from competitors and help providers make more money from their clients.
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Jason Byrne[/caption]
“Oversubscription is where you sell to a hotel with, for example, with 100 rooms and put a phone in each one. Statistically, there might only be about two room phones that are actually active at any one time in a hotel, that’s a 50:1 ratio. So the service providers are asking, ‘why am I paying my vendors on a seat based model when I'm only using a fraction of those seats?’” he asked.
He said that Netsapiens is one of the few companies that don’t charge providers based on a seat but on active sessions at any one time. Netsapiens has been disrupting the UC industry for many years with 160 Service Providers and over 1 Million users, and across a large amount of end user verticals. Currently this oversubscription rate is averaging 27:1 across all verticals, and the rate is growing at a CAGR of 29%, so providers can add 29% more seats every year without having to purchase more sessions.
“So for example if we sell 100 sessions and they oversubscribe their customers at 27 to one . This is over two and a half thousand seats before you fill your allocation,” said Byrne.
“Service providers also need to be able to handle bursts well above this, and we designed the solution to support when the service provider needs to handle more calls”
He asked why service providers are still paying by the seat to vendors when better alternatives are available.
“It's great that you charge by the seat because the industry accepts that. But the service providers are trying to disconnect their costs from their sale or profits,” he said. Service providers should be asking themselves why they need to keep paying per seat, doubling the price and selling it on.
