EMC Emphasizes 'Value' In New Pricing Model

Under value-based pricing, the discounts solution providers receive for selling all EMC hardware and software except its VMware and EMC Insignia-brand products is tied to the partner's commitment to the vendor, said John Koury, vice president of worldwide channel marketing.

Solution providers are assigned to one of four tiers depending on sales volume and the amount of certification and training they have achieved, Koury said. They are then evaluated every six months to see whether they migrate to a new tier or stay at the same tier, he said. Each of the four tiers has its own value-based pricing discount for all hardware sales, and a separate discount for all software sales, he said.

Pete Koliopoulos, senior director for channel and offer marketing, said that under the value-based pricing system, EMC is linking the discount squarely to a solution provider's performance and accreditation. "It is based on objective criteria," he said. "Not on who negotiates a better contract, but on what you can do and how you can achieve it."

In addition to better pricing, solution providers at higher tiers are also eligible for increased co-op funds and access to better rebate programs and levels, Koliopoulos said.

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Eric Linxweiler, vice president of Logicalis, a Bloomfield, Mich.-based solution provider, said a lot of vendors still rely on flat discount models because they do not want to upset solution providers that might not qualify for steeper discounts. "EMC is upsetting the apple cart by rewarding partners who commit to EMC," he said.

For solution providers that make the effort to get the required training and certifications, there is only upside, Linxweiler said. Top-tier partners get the benefit of training and midrange partners have incentives to get to the next level, while smaller partners have to decide if they want to make the required investment, he said.

The move shows how much EMC has changed from its direct-focus days of only five years ago, Linxweiler said. "[EMC Vice President for Americas Channel Sales] Gregg Ambulos has really taken up on the channel," he said.