I have a SAAS product with monthly subscription of $300 per user. I'm thinking of working with resellers where we split the annual contract value with them. We give $75 per user to the underlying platform provider. I am thinking of splitting the rest of $225 such that they get to keep a portion of our contract. Perhaps they could keep $50 per user. What are your thoughts on this arrangement? Will it work? The reseller gets ACV, and we get a portion of the revenue.
TALK TO THEM.
No one cares about your product.
I don't say that meanly. No one cares about MY products, either. I'm saying it to make a jarring point.
You know what they DO care about?
Things they they make, or already sell, that are making them most of the money they bring in NOW.
And your product is not doing that.
Therefore...(wait for it)...you don't have a real partnership with your resellers.
Apply our friend, the 80/20 Rule.
80% of your reseller sales (or thereabouts) come from 20% (or so) of your reseller partners.
They are *already* doing a good job for you.
They are *already* committed to your product.
They are *already* seeing decent revenue generated by their sales of your product.
Get the picture?
If you don't have reseller agreements with anyone yet, look for resellers successfully bringing in significant-to-them revenue with similar-type products to yours. Not identical. Similar.
Forget about the rest, for now anyway.
These productive few are the ones to get those sit-down meetings with.
And don't "present".
Ask THEM what THEY would be motivated by.
You can adjust that. It's negotiation.
But starting from that baseline, rather than yours, is preferable and effective.
And if they tell you, "We don't believe amping up the resources on pushing your product will result in a good-enough reward," ... now you KNOW.
Now you have a real symptom to deal with.
Numbers are great, but emotional involvement is better. One follows the other, and I think before you read this, you had it the wrong way around.
Answered 7 years ago
This can be a solid approach. I would recommend that the reseller and platform provider get similar deals, to keep consistency.
There are many platforms out that there allow for affiliated links and vendors that can sell your software as well, I suggest you take a look at this as an option as well.
Ensure that you have a reasonable profit margin as part of the incentive process as there could be additional time commitments, extra costs, etc. that come up as part of implementation.
Answered 2 years ago