The days of Extreme Networks transacting the majority of its business through special pricing is coming to an end.
The San Jose, Calif.-based networking vendor is undergoing significant changes following the launch of a new partner program which includes more up-front discounts in an effort to reduce special pricing.
"Today, about 95 percent of our business is transacted through special pricing. In the future, we want to move to more of a 50-50 model," said Gordon Mackintosh, channel chief and senior director of Extreme's Worldwide Partner Organization. "To obtain that, we're going to take Diamond-level upfront discounts to about 50 percent and Gold to around 48 percent."
Extreme Diamond and Gold level partners previously received upfront discounts of around 42 percent.
In addition to the percentage increase, Extreme will also be combining deal registration on top of the upfront discounts, which accounts for an additional 10 points.
Partners were bullish about Extreme's plan to cut down special pricing and increase upfront discounts.
"It's going to make it easier to do business with Extreme where we're not coming down on a deal-by-deal basis asking for special pricing," said Bill Smeltzer, executive vice president and chief technology officer at Focus Technology Solutions, a Seabrook, N.H.-based Extreme partner. "It's a good turn that they're coming out of the gate giving maximum discounts as part of the channel program."
Smeltzer said it's an industry issue that the normal course of action for the channel is to immediately submit for special pricing because that's how partners receive the best discounts.
"If Extreme bakes the discounts in up-front -- and that is truly their highest level of discount, and they're not giving avenues to go get an extra two or three points above that -- it's going to be beneficial and make it a lot easier to do business with Extreme. Every deal doesn't become a one-off and a custom price," said Smeltzer.
James Marsh, chief revenue officer and owner of Carousel Industries, an Exeter, R.I.-based Extreme partner, ranked No. 61 on CRN's 2017 Solution Provider 500 list, said his company has around 65 sales support employees who help with the special bidding process.
"It's a great strategy here for Extreme," said Marsh. "It reduces a lot of noise not just for them, but for administrative cost and the whole process of, 'How quick can I go to market and get price to the field?' This will definitely help."
The move will also help solution providers who run into scenarios where a customer purchased a product under special pricing and then gets upset when the price increases the next time they seek to buy the same product.
"The question becomes, 'Why couldn't I get it at the price we got it to before?'" said Smeltzer. "It slows down sales cycles and [the process of] getting quotes out to clients because you're waiting for the return of special pricing."
Mackintosh said the changes will make it easier and simpler for partners to work with Extreme.
"We're hoping that's where we can start to see more of the business transacting, so it will be easier for the partners; they don’t have to wait for special pricing," said Mackintosh. "[This] will allow us all to be a lot more productive for the business to transact with less friction than it does today."