Maximize Profitability Through Oversubscription
For service providers across America, oversubscription is a path to greater profitability with every new customer signed. Since 2016, the oversubscription ratio has grown from 15:1 to 25:1. That’s a 66% growth over three years!
These numbers tell us that, through oversubscription, service providers should be able to add almost 20% more customers per year with no additional capital expenditures on their part. That’s a big help when it comes to entering new markets.
In this blog, we look at how to oversubscribe your PBX and how that allows you, as a service provider, to keep additional revenue from new customers in your pockets.
Mobility and New Digital Technologies are Driving Oversubscription
The simple truth is that the modern workforce no longer wants to be constrained to a desk. Instead, today’s employees want the freedom to work from different locations throughout the week.
As well, a growing number of workers are using their own devices in place of the phones sitting on their desks. A lot of this is due to the rise in the number of digital-native millennials entering the workforce.
To satisfy their expectations of seamless connectivity and provide alternatives to making calls, businesses today are offering their employees a host of real-time collaboration applications that go beyond voice services. All this means less individuals are using the traditional voice services of the past and there is a greater potential for higher oversubscription ratios on the part of service providers.
How to Oversubscribe Your PBX Network
From a UC voice services perspective, it is impractical for you to offer dedicated access for each of your customers. After all, it is extremely unlikely that all your end-users would be making calls at the exact same time.
That’s where oversubscription comes in; it allows you to save money by creating an architecture in which multiple end-users share common resources. When done right, the end-user’s experience mimics that of having their own dedicated access. Meaning, you should be able to offer high quality voice services in which calls are not dropped or plagued by interruptions.
Oversubscription begins by establishing the average number of daily concurrent calls being made by your end-users. To be safe, you should pull trunk utilization reports for several weeks or even months to ensure you have the most accurate insight.
Once you establish a baseline, select the number of SIP trunks required to support the load while also allowing for future growth. Because SIP trunks leverage broadband/internet connections and not a series of fixed lines, they offer service providers enormous flexibility over traditional PRI circuits. This flexibility allows you to oversubscribe your PBX.
Many Unified Communications Platform Providers do Not Allow You to Oversubscribe Your PBX
In the coming years, oversubscription ratios will grow even higher. Unfortunately, many service providers are not be able to benefit from this. Especially if you purchase your Unified Communications features on a per-seat basis.
In fact, the seats-based pricing models of many common platform providers completely kill the potential for oversubscription. This is because, under these schemes, you must purchase a new license for every new customer you sign. As a result, a significant portion of new customer revenue goes to the platform provider instead of your pocket.
How to Maximize Profitability Through Oversubscription
With the alternative model of sessions-based (concurrent calls) pricing, you can finally oversubscribe your PBX to generate maximum revenue. Just one session license allows a provider to service multiple customers.
As a result, when you buy licenses on a session – not-seats basis – you can then sell the features to your own end-users on the standard per-seat basis. In this way, your costs remain low and fixed, while your profit margin has the potential to increase exponentially. Essentially, procuring Unified Communications features under a sessions-based pricing model is ideal for service providers pursuing maximum oversubscription ratios.
At netsapiens, we’ve always viewed oversubscription as a path to revenue for service providers like you, regardless of your size. From the very beginning, we set up a sessions-based pricing model that can facilitate oversubscription and service provider profitability. But what happens if you go over your amount of sessions? Don’t sweat it! No call will ever be dropped because of that.
If you want to take better control over your growth, stop purchasing your Unified Communications features on a per-seat basis. Come on over to sessions-based pricing and experience the difference. It’s how you can stay ahead of the competition.
To learn more, download our latest report on oversubscription and contact us! We’re happy to answer your questions.