Facing up to Reality: The Wholesale Pricing Challenge
Find a way to capture more revenue and protect MVNO business from price pressure – learn from Dipper.
At the recent MVNOs’ World Congress in Berlin, we heard a number of speakers discuss the challenges MVNOs face in maintaining competitive prices. They are challenged in two directions:
- Wholesale price agreements with the host MNO or MVNE
- Downward price pressure in retail markets
Essentially, if consumer prices fall while wholesale prices remain the same, then margins will be squeezed or even threatened. Since many MVNOs are established on the basis of offering low prices with this being the primary differentiator for the service, this is quite a conundrum.
But not that complicated. While renegotiation of wholesale rates can be achieved and while some have flexible partnerships that can result in flexibility, costs remain an issue. In that context, it’s worth asking if there are ways to offer low-price or compelling packages that can still be profitable. How can an MVNO manage price pressure while still building a profitable business?
The answer to this is to think of ways to add value that are unaffected by wholesale agreements and provide the freedom for the MVNO to set its own prices, appropriate to the market. This can emerge from careful selection of individual markets and segments and the definition of value added services that can be offered over and above (or integrated within) a basic package.
This is what Dipper has done in Norway. It offers simplicity in terms of pricing bundles but it also positions its enterprise call management service (what it calls the ‘Switchboard’) as a value-added feature available to its customers. For a flat fee, subscribers can gain access to this – and Dipper immediately secures an impressive recurring revenue stream that provides profitability and shields it from price fluctuations in wholesale or retail.
Because the offer includes valuable features for enterprise and SME customers (IVR, hunting, day / time based routing, virtual switchboard, music-on-hold and so on), it’s a simple win-win – the end user benefits from features that aid productivity, reachability and service performance, for a predictable opex-based subscription charge, while Dipper builds a business based on loyal subscribers.
In challenging markets, it’s better to try to offer something that can be insulated from or immune to price pressures. Enterprise services find a ready market and users understand the benefits, making them less volatile and more likely to remain with the provider. The offer, of course, helps recruit more subscribers.
If you are finding market conditions tough or if it’s challenging to maintain margins with existing wholesale offers, why not find out how you can emulate a proven recipe for success? Just ask Gintel to show you how.