How to Maximize Profits in a Low Margin VAR Business

Reading Time: 3 minutes
Reading Time: 3 minutes

With each passing day, VAR business is getting more and more competitive. As a result, margins have shrunk considerably which has reduced overall earnings of VARS. Without getting an adequate gross profit margin, a business cannot pay its expenses and enhance earnings for future growth. Hence VARS are looking for different ways to improve their profit margin so as to run their business efficiently.
The following blog discusses some proven strategies to increase your margin in a competitive market where growth is hard to come by,

Automation is a great tool to enhance margins. The biggest thing a VAR can do for his business is automate the areas that can be automated. There are various software applications that can automate various business processes like quoting, sales, procurement, catalog management, procurement etc. It makes sense to use such tools.

Also it is advisable that you try to manage most of your functions in one software or use software that integrates well with your existing applications. Otherwise you will spend a lot of time entering same data in multiple places wasting time and also making it error prone.

  • Get Handle on Pricing and Profitability

You cannot correct your business processes unless you are aware of them. So identify the areas on which you are getting low and high margins. Find out how you are pricing your products and what kind of profitability you are getting. Understand the environment, see what your competitors are doing. Learn from the bigger players in the industry. This will help you to identify the changes that need to be done in your business processes so as to maximize profit.

  • Have an Online Presence / Setup an Ecommerce Store

Having an ecommerce store is no longer a luxury but more of a necessity, particularly for low margin VAR business. Online shopping is really convenient and will definitely save time and effort of your customers. With an ecommerce store, your customer can shop at any time of the day from the comforts of their home. Moreover, your online store is not limited by any geographical area or time zone constraints, thereby helping to gain new customers. Push commodity sales or Low Value/Low margins items online as much as possible. All this can contribute to improving your VAR business health.

  • Be Omnipresent – Catalog export to market places etc.

In order to improve your margins and overall revenue, try to sell through multiple channels. For instance, there are software platforms available that allow you to export your product catalog to popular marketplaces like Amazon, eBay, and Google shopping etc. So use of these software platforms will make your products available at most of these marketplaces. This will help you to get additional sales, thereby ensuring greater margin and revenue.

  • Add Value to your Customers

Try to add value in everything that you do. That value can come from your services, great product knowledge, customer support and even quick turnaround time. So add value as much as you can, which can always help to get more from your customers. You can get repeat business from the customers as well as more margin from the same deal itself.

  • Get Bigger Business Volumes

 As your business grows, your cost of procuring the product goes down. For instance, if you are buying 5 laptops, each costing $100, the same distributor may give each laptop for $98, if you are buying 50 pieces. So it is necessary to improve your business volume. So as you improve your business volume, it will help you to get better pricing, in turn increasing your profit margin.

Read the following article to know about software tools that can benefit VAR business:

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