How To Make Money Selling Linux

In small to midsize businesses (SMBs), where many times a VAR's influence is greater because of a lack of an IT staff, Linux can provide strategic and needed solutions. Because SMBs rely heavily on their VARs for solutions, often the specific implementation of technology is transparent to the end user. Customers want solutions that work, that solve their business problems. So it is not Linux, per se, that you can profit from selling but the solutions that Linux enables.

Simply selling Linux on a CD to a customer and walking away represents the model of the past (reselling boxed software). Instead, successful resellers are bundling the Linux operating system into solutions such as the following:

Problem No. 1: A doctor's office has a network of five desktop machines and one server with an Internet connection. All five clients need access to the Internet but only one physical IP address exists.

Solution: An IP Masquerading server based on Linux will allow each client to have Internet access with the single physical IP address.

Problem No. 2: A small office has 10 Windows 95/98 clients networked together; they need to be able to share files and print services.

Solution: Linux file-and-print servers based on SAMBA, which allows seamless file and print services to SMB/CIFS clients, allow the 10 Windows 95/98 clients the ability to print and share files to a Linux server.

Problem No. 3: An office with 50 clients, each with an e-mail address, needs a server to accept and store the mail.

Solution: Sendmail server on Linux

Problem No. 4: An existing customer asks you to set up a Web server and access Web sites.

Solution: Apache Web server on Linux

Problem No. 5: A construction company has a heterogenous environment made up of various clients, including Windows, Macintosh, Netware and Linux. The customer would like to bring all the clients together to access the Internet.

Solution: Linux as an Internet server. Linux includes the following protocols: TCP/IP, SMB, IPX, AppleTalk and others to support a heterogenous network, allowing numerous clients to communicate to a Linux server.

Making Money With Linux
One area in which VARs can profit selling applications based on Linux is the accounting office. This comparison of how an accounting system could be set up using an OpenLinux solution versus a commercial Unix system illustrates the enhanced margins a VAR can earn using an Open Source solution.

OpenLinux Solution:++ Accounting Application:++ $3,000 (est.)
Caldera OpenLinux:++ $49

IBM Netfinity 5000*:++ $3,827
Total cost of solution: $6,876
Total sales price:++$11,000
Reseller margin:++ 37 percent

SCO Solution:
Accounting Application: $3,000 (est.)
SCO Unixware 7:++ $1,600
IBM Netfinity 5000*:++ $3,827
Total cost of solution: $8,427
Total sales price:++$11,000
Reseller margin:++ 23 percent

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In this example, the reseller prices the SCO solution and OpenLinux solution at the same price of $11,000. The cost to the customer is the same because the quote is pegged to the value of the solution, not the cost to the reseller. The reseller earns 37 percent margin on the OpenLinux sales in comparison with the SCO solution at 23 percent margin. By selling the OpenLinux accounting solution, the reseller can increase their overall sales margin by 14 percent.

Revenue On Service Contracts
After an installation is sold, VARs have the opportunity to continue to earn fees for ongoing maintenance, support and service. The stability that the Linux operating system offers can be an important feature for VARs who sell monthly service contracts because it allows them to keep the service revenue they have charged. Linux supports remote access. So, whenever Linux needs to be reconfigured or modified, resellers do not have to go on-site to fix Linux-based desktops and servers. This diminishes travel expenses in getting to the site and enhances response time, allowing a VAR to do the configuration from any remote location. For the client, help can be no more than a phone call away.