Table of Content
- What is Smart Pricing for IT Resellers?
- How to Use Discounts Without Cutting Into Profit Margins
- Tiering by Service Level, Not Just Spend
- How Bundles Boost Your Sales
- Sell More with Cross-Sells and Upsells
- Use Payment Terms to Protect Profitability
- Where IT Resellers Lose Profit Margins
- Add Higher-Margin Services to Your IT Reselling Business
- Why AOV is Your Secret Profit Lever
- Old Way vs. New Way of Selling
- Grow Your Business with VARStreet
- Conclusion
- FAQs
Just 1% better pricing can make 11% more profit.
For IT resellers, that 1% can make a real difference. Most resellers work with tight margins, while customers expect competitive prices and competitors are constantly trying to undercut them.
The problem is that profit doesn’t depend on pricing alone. Unnecessary discounts, low-value orders, outdated product costs, and manual processes can all eat into your margins.
So, how can you increase profit margins without simply trying to sell more?
From smarter pricing and strategic discounts to bundles, upsells, higher-value services, and automation, there are several ways to make more from every sale.
Here are some practical strategies you can use to increase profit margins as an IT reseller.
Key Takeaways:
- Pricing is your biggest profit tool. Just 1% better pricing makes 11% more profit. This beats cutting costs or selling more.
- Different customers need different prices. One price for everyone is to lose money. Create tiers based on customer type and history.
- Discounts need a reason. Every discount should increase order size, speed up payment, or secure a long contract.
- Bundles are powerful. They can boost order size by 25-60%. They also stop price shopping and protect margins.
- Automate your pricing. Manual pricing causes mistakes and inconsistency. Automation protects profit and speeds up sales.
- Focus on order value, not just margin. 10% bigger orders with the same margin means much more profit.
- Give payment choices. Multiple payment options and smart terms close enterprise deals faster. They improve cash flow, too.
What is Smart Pricing for IT Resellers?
Smart pricing is one part of a broader profit-margin strategy. Instead of applying the same markup to every product or customer, profitable IT resellers consider their costs, customer value, competition, order size, contract terms, and desired margin before setting a price.
The goal is not always to charge the highest possible price. It is to find a price that remains competitive while giving your business enough room to cover operating costs and generate a healthy profit.
Three Pricing Strategies for IT Resellers
1. Cost-Plus Pricing (The Old Way)
This is the basic method. You buy from a distributor and add a markup. It’s simple and safe. But it doesn’t give you much flexibility.
You should set different markups for different customers:
- Big companies (Enterprise)
- Small businesses (SMB)
- Government and schools
- Repeat buyers
2. Dynamic Pricing (The Smart Way)
This means changing prices based on what’s happening now. You adjust for:
- Supplier price changes
- What competitors charge
- How much stock you have
This works great for laptops, servers, and accessories. But you need software to do it automatically. Manual updates are too slow.
3. Contract Pricing (The Enterprise Way)
Big customers want fixed prices. You agree on prices ahead of time. These deals include:
- Service level agreements
- Minimum purchase amounts
- Maximum discount limits
This is a must for government and large company buyers.
How to Use Discounts Without Cutting Into Profit Margins
Many IT resellers give discounts too easily. Don’t do this. Use discounts as tools to make more money, not less. The key is knowing why sales reps discount before setting discount rules.
When to Give Discounts
End-of-Quarter Deals: Give discounts to close deals fast and hit your sales targets.
Vendor-Funded Savings: Some suppliers give you money to discount certain products. Use these deals.
Time-Limited Offers: Create urgency with “buy now” prices that expire soon.
The Golden Rule: Every discount should help your business. Don’t discount standard products without a good reason.
Volume Discounts Work
These discounts reward customers who buy more. They work great for:
- Keyboards and mice
- Cables and adapters
- Toner cartridges
- Memory modules
Example: Buy 5 items, get 5% off. Buy 10, get 10% off.
This makes customers order more at once. Your average order goes up.
Reward Your Best Customers
Create levels based on yearly spending:
- Bronze: $10,000-25,000 per year (5% discount)
- Silver: $25,000-50,000 per year (10% discount)
- Gold: $50,000+ per year (15% discount)
Top companies do yearly pricing reviews. This keeps customers coming back.
Tiering by Service Level, Not Just Spend
Tiering doesn’t have to stop at discount level. Some resellers also tier by how much fulfillment work they take on, a basic resale with self-service setup, a mid-tier with partial implementation support, and a full-service tier where the reseller handles everything end-to-end. Each level can carry a different margin structure, since higher-touch tiers justify higher prices even when the underlying product margin stays the same.
How Bundles Boost Your Sales
Bundles are powerful. They can increase how much each customer spends by 25-60%.
Ready-Made Bundles
Create packages for common needs. For complex IT solutions, bundle structure can help you group products and services into a clearer offer.
- Laptop + warranty + bag
- Server + rack + cables + setup
- Firewall + security software + support
Customers see the total value. They don’t compare individual prices.
Custom Bundles by Industry
Make special packages for different businesses:
- Schools: Student laptops + charging carts + management software
- Retail stores: POS systems + receipt printers + cash drawers
- Offices: Workstations + monitors + docking stations
Smart Pairing Strategy
Pair low-profit items with high-profit add-ons:
- Printer (low profit) + toner cartridges (high profit)
- Router (low profit) + 3-year support (high profit)
- Monitor (low profit) + premium cables and stands (high profit)
This protects your total profit even when main items have thin margins.
Sell More with Cross-Sells and Upsells
Cross-Selling (Add Related Items)
When a customer buys one thing, suggest related products:
- Laptop → add docking station + antivirus
- Server → add backup drives + management software
- Switch → add network cables + mounting kit
This increases your average order by 15-40%.
Upselling (Move to Better Products)
Help customers choose better versions:
- 16GB RAM → 32GB RAM (better performance)
- Basic firewall → Next-Gen firewall (better security)
- 1-year license → 3-year license (save money overall)
Show the value. Explain why the upgrade helps them.
Upselling can increase orders by 10-30%.
Use Payment Terms to Protect Profitability
How customers pay affects your sales and cash flow.
Offer Multiple Payment Methods
Give customers choices:
- Credit and debit cards
- Bank transfers
- UPI payments
- Company credit accounts
- Buy now, pay later
- Purchase orders for approved customers
More options mean more sales.
Use Payment Terms Strategically
Early Payment Discounts Give 2-3% off for paying upfront. This helps your cash flow.
Extended Terms for Big Customers Allow 30, 45, or 60-day payment for qualified buyers. This closes enterprise deals faster.
Milestone Payments For big projects, collect payments at different stages. This reduces your risk.
Where IT Resellers Lose Profit Margins
Improving profit margins is not only about increasing selling prices. Margin can disappear at several points in the sales process.
Outdated product costs
If distributor costs change but your quote still uses an old price, the margin shown to your sales team may not reflect the actual profit on the deal.
Uncontrolled discounts
A small discount can have a much larger impact on profit than it does on revenue. For example, reducing a $10,000 deal by 5% means giving up $500 in revenue. If the original margin was already thin, the impact on profit can be significant.
Low-value orders
Small orders can require almost as much sales and administrative effort as larger ones. Increasing order value through bundles, cross-sells, and upsells can make each transaction more worthwhile.
Manual quoting and purchasing
Manual product searches, cost updates, and quote calculations create opportunities for errors. They also consume time that your sales team could spend on higher-value opportunities.
Selling only products
Hardware and commodity products can be highly competitive. Adding implementation, support, managed services, warranties, security, or other value-added services gives resellers additional ways to generate revenue from the same customer relationship.
The key is to look at the entire deal, rather than judging profitability from product markup alone.
Customer Example: Sehi Computer Products
Sehi Computer Products uses VARStreet to automate 40+ customer pricing tiers, simplify quoting, and manage catalog and customer data from one platform.
“VARStreet has greatly helped us in just about every aspect of our business. Our customers are able to gather all the information they need for their end-of-things. We can easily quote and manage our CRM data via the BackOffice. The reporting provided to us in the BackOffice, and our customers on the front end, makes things very easy to follow up, track, and manage.”
Casey Pilley, System Project Manager, Sehi Computer Products
Read the full Sehi Computer Products success story.
Add Higher-Margin Services to Your IT Reselling Business
Product margins are only one part of an IT reseller’s profitability. You can also increase revenue per customer by offering services around the products you already sell.
Depending on your business model, these can include:
- Installation and configuration
- Managed IT services
- Technical support
- Cybersecurity services
- Cloud services
- Backup and disaster recovery
- Extended warranties
- Software and licensing
- Maintenance contracts
For example, a reseller selling a firewall can also offer installation, configuration, security monitoring, and ongoing support. The product creates the initial sale, while the additional services create more opportunities to generate revenue from the same customer.
This approach also makes your business less dependent on competing on hardware price alone. Customers are comparing the overall solution and support they receive, rather than only the price of an individual product.
The right mix depends on your capabilities and customer base. The goal is to identify services that solve a real customer need while generating enough revenue to justify the cost of delivering them.
Why AOV is Your Secret Profit Lever
Increasing average order value (AOV) can be one of the simplest ways for an IT reseller to increase profit without acquiring an entirely new customer.
Suppose your current AOV is $1,500 and you’re operating on a 10% net profit margin.
If you use strategies like bundling, cross-selling, or automated product recommendations to increase that AOV by just 10%, look at what happens:
- Current AOV: $1,500
- New AOV (10% increase): $1,650
- Extra Revenue per 1,000 orders: $150,000
- Extra Bottom-Line Profit (at 10%): $15,000
The Reality Check: To get that same $15,000 in profit by “selling more,” you would have to find dozens of new customers, spend more on marketing, and double your sales team’s workload. By focusing on AOV, you’re making more money from the customers you already have.
Small, strategic improvements in your quoting workflow don’t just add up, they compound.
Margin Structure Matters as Much as Order Size
Beyond order value, margin structure itself matters. Product-heavy resellers often operate on thin single-digit margins, while businesses that shift a meaningful share of revenue toward services and support contracts tend to see healthier, more predictable margins over time. This is one reason bundling support and maintenance into deals, not just hardware, has an outsized effect on overall profitability.
Pro Tips:
- Use tiered customer pricing (Bronze/Silver/Gold) based on annual spending to reward loyalty and increase retention
- Pair low-margin commodity items with high-margin add-ons to protect overall profitability on competitive products
- Automate pricing rules and discount thresholds to eliminate manual errors and maintain consistent margins across all quotes, especially when vendor prices can change daily.
How Manual Pricing Can Reduce Profit Margins
The main risk of manual pricing isn’t just slower quoting; it’s inconsistency. When pricing rules live in a rep’s head instead of a system, the same product can quietly get quoted at different margins to similar customers, and nobody notices until a quarterly margin review flags it.
Old Way vs. New Way of Selling
| What You Do | Old Method | Better Method |
|---|---|---|
| Setting Prices | Same markup for everyone | Different prices for different customers |
| Giving Discounts | Manual decisions each time | Automatic rules based on goals |
| Showing Products | Individual items only | Bundles and complete solutions |
| Payment Options | Just PO and credit card | Many options with flexible terms |
| Creating Quotes | Manual and slow | Automated with live pricing |
| Protecting Profit | Hope for the best | Use data and automation |
Grow Your Business with VARStreet
Using smart pricing and discounts is easier with the right tools. VARStreet is business management software made for IT resellers. It combines sales quotes, online stores, customer management, and purchasing in one platform.
For more than two decades, VARStreet has helped IT resellers manage pricing, quoting, purchasing, and customer information in one place.
The platform has 7+ million products from 50+ suppliers, with live pricing and product details to help keep product information current.
VARStreet’s quote system supports many of the strategies covered in this guide:
- Auto-create bundles with pricing
- Set different prices for customer levels
- Apply volume discount rules
- Manage contract pricing
- Support multiple payment options
- Calculate margins while quoting
By bringing these processes together, VARStreet helps reduce manual work and gives resellers better visibility into pricing and margins.
Conclusion
Every strategy in this guide, from tiered pricing and bundling to cross-sells and AOV growth, only works if it’s applied consistently across every quote. That can be difficult when pricing lives in spreadsheets, email threads, or a single rep’s memory.
VARStreet puts pricing rules, customer tiers, bundles, and margin visibility into one connected system. This helps your team apply the pricing strategy you intended instead of relying on manual processes and guesswork.
Ready to improve your pricing and make more from every sale? Schedule a demo with VARStreet to see how its business management software can support your IT reselling business.
FAQs
How do I use flexible pricing without losing customer trust?
Make pricing clear and consistent. Base differences on factors such as order size, payment timing, contract length, or service level. Avoid changing prices randomly, and explain the value behind different pricing tiers.
Should IT resellers ever price below cost to win a deal?
Occasionally, as a deliberate loss-leader tactic tied to a larger opportunity, such as a low-margin hardware sale that leads to a higher-margin service contract. However, pricing below cost should not become a default response to price pressure.
How do I know if my profit margins are competitive?
Look at your close rate alongside your margins. If you’re consistently winning competitive deals, there may be room to price higher. If you’re losing deals on price, review your costs, bundles, and value proposition before simply offering larger discounts.
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price, while markup is profit as a percentage of your cost. For example, a 50% markup on a $100 product gives you a $150 selling price and a 33.3% margin. Confusing the two can lead to underpricing.
Can bundling hurt profitability?
Yes, if bundles include products or services customers don’t need or if the bundle is priced too aggressively. The goal is to combine relevant products and services at a price that increases order value while protecting your overall margin.
How often should IT resellers review their pricing?
Review pricing regularly, especially when distributor costs, competitor pricing, product demand, or purchase volumes change. At a minimum, conduct a broader pricing and margin review annually and make adjustments sooner for fast-changing product categories.
