Changing the Margin Game?

Accounting Technology, July, 2006 by Robert W. Scott

Throughout its history, the accounting software market has been dominated by the pursuit of product margins. It's a basic formula: The greater the margin, the more money is left for expenses, and hopefully, for the bottom line. But margins have been squeezed: squeezed by competition; squeezed by the vendors who want to improve their own profits by raising the volume required to get the best prices, while the top margin percentage rates themselves decline.

The resellers' best answer to the squeeze has been to sell high-margin items such as services and maintenance contracts, a response that is unlikely to change. But there are other revenue sources outside of selling products and related services, and they will be increasingly tapped as we enter the era of transaction-based...

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