Managed Functions is priced so that our partners can make significant margins layering their network and expertise on top of our ability to deliver robust integrations.
We charge a set monthly platform fee of $2,500 and $10 fee per month per active pipeline. In addition, we charge you for our time in building and supporting the pipeline and any cost incurred for cloud infrastructure. We are very efficient pipeline builders and, because the infrastructure is serverless, most customers pay less than $50 per month for infrastructure. This essentially means that you pay for labour to implement pipelines but you can charge for value which can create a very high margin business for you.
|Monthly platform fee||$2,500|
|New implementations||~$650 each|
|Monthly fee per pipe||$10|
|Infrastructure fee||At cost + 30%|
Let's look at some scenarios:
Most partners have a couple of customers in mind when they sign up to be a partner.
Take Joan, for example. She has been a management consultant for 20 years and is keen to bring some recurring revenue into her business. She has a customer who she knows can generate $100,000 in annual savings plus improve their responsiveness to their customers if they connect their Point of Sale system to their finance system and warehouse system.
Her customer agrees to pay her $10,000 to implement the integration and $3,000 per month to run it. Her customer is happy because their project delivers a first year ROI of more than 100% and Joan is happy because she will earn $46,000 over the year which completely covers her Managed Functions fees with her first customer. And each customer after that is very high margin!
Let's look at John. He is an accountant with a few dozen Netsuite customers. He knows that each of them stuggle to get good operational data into Netsuite and has done integrations for 20 of them. He just charges a monthly fee of $500 for the integrations and a setup cost of $2,500. He has done this during his first year of being a Managed Functions partner.
So, at the end of year 1, John has made $50,000 from implementations and he bills $10,000 per month for ongoing support (and he has absolutely locked in these customers to his accounting practice).
|Support ($500/month * 20)||240||$500||$120,000|
His Managed Functions fees over that time show how good a business John is building.
Over the course of his first year, John has paid his monthly platform fee 12 times. Each of his integrations cost an average of $650 to build. He pays $10 per month per pipeline (and his 20 customers have an average of 3 pipelines each) and so has paid $7,200 for this over the course of the year. And his infrastructure costs run at an average of $40 per month (including our markup). So his profit margin is 70%!
The only thing missing from this table is costs for ongoing support of pipelines which we charge out at $80 per hour. These costs are normally pretty small. Nevertheless they improve John's margin because he on-charges this to his customer for $150 per hour.
|Pipelines ($10/month * 60)||720||$10||$7,200|