With the current trend towards free installation and reduced rentals, over 80% of new Ethernet contracts are on 36+ month terms. This is proving to be a double-edged sword for resellers who like the stickiness of these contracts but are worried about hefty cancellation penalties should their customer go bust.
By signing up to only a 12 month term with their supplier they can limit this risk but they will have to pay the installation charge and usually a higher rental. This means they have to either accept a lower margin or risk being uncompetitive and losing the order.
Griffin has come up with an innovative solution to this problem by limiting the cancellation penalty to the reseller to 12 months, whatever the contract term.
Lee Broxson, Head of Sales at Griffin “The average monthly Ethernet rental to a Griffin Partner is around £500 which previously meant if they signed up to a 3-year contract and their end user went bust in month 13 they would owe us £12,000 in cancellation charges. With this scheme they would simply have to give us 30 days notice, reducing their liability by £11,500. We are hoping that this will enable far more of our Partners to take advantage of the current Ethernet boom.”