Ingram Micro Lets Solution Providers Choose Their Own Pricing Scenarios

But there's one place in the channel where it is even more difficult to survive and profit from your value-add, and that's distribution. Distributors have faced a particularly difficult task over the past few years in dealing with their largest, but not necessarily most profitable, system suppliers. Behemoths like Hewlett-Packard, IBM, Cisco and others are less willing to sweeten the pot for distributors and are demanding they add value beyond time and delivery.

The distributors, for their part, have had difficulty articulating the value they bring to the table because it has been bundled with everything else. Beyond obvious services like credit, returns handling, and efficiency in sales and distribution tasks, there are lots of things distributors handle that I believe manufacturers,and even solution providers,take for granted.

What's the value you place on your distributor's inside sales representative when he or she points you to a special pricing deal you didn't know about that made you more profitable? How much is rapid technical support worth when it helps you hold on to an angry customer?

Certainly, distributors in many cases pulled back from unprofitable customers during the recent downturn by eliminating things like free shipping and in some instances simply walking away from unprofitable business altogether. It's the reality of the open market in an environment where there is increasingly less room for error.

Needless to say, the nuances of setting price are complicated, especially when there are, at times, intangibles associated with a product. That's why Ingram Micro's soon-to-be-rolled-out Choice Advantage program is so interesting.

As CRN's cover story this week explains, Ingram Micro plans to let customers choose between three basic pricing schemes. Solution providers can choose the one they believe best fits their company's business model. So those that require a great deal of technical support and other services from the distributor are likely to choose the Professional Choice plan, which offers high-value technology and technical services. A solution provider with a business model that requires very little assistance, on the other hand, is likely to choose the Independent Choice model, which comes with a lower price point on products but has fewer support services. The Active Choice plan sits in between the other two. Solution providers can buy services a la carte, but that proves to be less cost-effective.

There are many ins and outs to the program that I don't have space to detail here, but I'm excited about the approach.

That's because I believe the channel and distributors should be paid for the value-add they provide. At the same time, you can't make everyone pay for value-added services they may or may not receive. Historically, that has been the approach under a single pricing model. But the only way to truly get paid for value in this market is to unbundle that value and sell each and every aspect of it separately or through realistic bundles.

Ingram Micro is attempting to do just that with its new program. Whether or not it is successful, only time and the free market will tell, and much will depend on how customers and even its competitors react.

I'm hoping Ingram Micro is successful because I believe this move could result in a stronger channel and a more realistic pricing model that is clearer about where value-add lies.

Make something happen. I can be reached at (516) 562-7812 or via e-mail at [email protected].