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BluB0X Margin Multiple Tool

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Overview

 

One of the mistakes that integrators make when transitioning from selling one-time revenue client server solutions to Security-as-a-Service Cloud solutions is how they competitively bid them. System integrators historically make all their money on the one-time initial sale, however in the world of Security-as-a-Service Cloud solutions, a significant portion of margin is made over time. This fact enables system integrators to be more aggressive on initial sale margin while still making additional margin over time. The second fact is that a BluSKY system generates 4-8 times more margin over a ten-year period then the margin generated by a one-time sale. The size of the multiplier is dependent upon what components of recurring revenue are sold. Lastly, reducing the margin of an initial sale has very little impact on the total revenue or multiple of a BluSKY system. In order to see this for yourself follow these simple instructions in the BluB0X Margin Multiple Tool.

Using the BluB0X Margin Multiple Tool is simple as with all BluSKY products.

Entering data into the dark green cells are what drive the results of the BluBØX Margin Multiple Tool. 

To get started, 

  • Enter the proposed MSRP hardware and labor amounts.
  • Next enter the Margin percentage for one time sales.
  • After, enter the BluSKY license, if not known use 0.4 times the hardware amount.
  • Select “Yes” for the BluSKY license to include in the calculation
  • Then select “YES” for Hardware as a Service or Equipment Replacement Program but do not select “YES” for both.
  • Next select “YES” for Support to include System Support/Maintenance.
  • Then input the annual increase, the standard is 3% (103%).
  • Lastly, enter the Company Value Multiple, the standard for BluBØX is 5 for the quality of BluSKY annual recurring revenue.
     

The Total Gross Margin $ of a one time sale is shown in the fuchsia colored cell. The pink cells show the margin components. The Total Gross Margin $ of a BluSKY sale is shown in the Total column for Elite, Premier, Certified and Partner Resellers. Compare the Total Gross Margin $ of a one time sale (fuchsia) to the BluSKY system sale Total Gross Margin $ (yellow, red, cyan or grey.) The BluBØX Margin Multiple shows the number of times more margin generated by a BluSKY system vs. a one-time sale. A BluBØX system, of any size, generates 4 to 8 times the margin over a 10-year period compared to the margin generated by a one-time sale. Start with everything set to "No" and 100% An. Inc. Add BluSKY Licenses. Then add Support. Then ERP. Then set Annual Inc. to 103%. Look at the impact of each component.

Reducing the margin of an initial sale has very little impact on the total revenue or multiple of a BluBØX system. Start with the hardware and labor margins set to 35% and 50% respectively. Look at the BluBØX Total. Now change the margins to 20% and 35%. The Totals barely change.

BluSKY Licenses typically provide the largest multiple of margin, followed by Support and then Annual Increases. Equipment Replacement Plan and Hardware as a Service provide some margin multiple but mostly provide flexible funding vehicles and a 6-year commitment for all recurring revenue.

The company value contribution of one-time margin is zero while the company value contribution of recurring revenue is 5 X Annual Recurring Revenue.

A BluBØX system provides an increasing company value YOY due to increasing recurring revenue YOY for that system.