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How to determine your reseller margins - for SaaS, VARs, Retail
chanimal.com
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Compile competitors’ margins. You can sometimes find it on 1) your competitor’s website (Click Sample Reseller Margins – for an example (Xero accounting)), by 2) sending an email to the channel manager (use a generic email address), or even by asking a reseller about their program (some will send you the entire kit). You can often 3) Google it, “Microsoft margins,” or “How much margin does Microsoft pay,” “What is the commission for Microsoft,” etc. (try different combinations – often it is on a website and Google can find it). Questions to Ask: “Who pays who? Do I place the order and pay you, or do you collect and pay me?Do you have levels?Where do you start? The lowest, or can we come in higher?What margins do you pay for each of the levels?What are the qualifications per level?How long do you pay?How soon do you pay?Do you have a partner program page that explains this or a document you can send?” Determine margins for “like” products if you can’t find any exactly like yours. For example, if you sell enterprise software to IT, you might compare it to Oracle, Microsoft, etc. Find out as above.
How to Determine Reseller Margins “When creating a reseller program, you always have to determine the margins for your affiliates (link referrals and referral forms), resellers (retail through VARs) and even white-label partners.” NEW! Want more info on how to set up your margins? Watch the VIDEO?
Sample Models – avoiding Exclusivity “Many resellers will try to negotiate these when a vendor doesn’t have a formal program to lock up exclusive advantages.” It helps to see a model of all types of partner types so you can map what the partner does (and their respective value) to the typical margins. Unless it is a hard-to-get-into country, like Japan, I do NOT recommend exclusive deals. I had one vendor out of Australia that created an exclusive deal with a single reseller in California that got California, Nevada, and Oregon as an exclusive territory. There was a 3-year time limit but no performance clause. California is the 17th largest economy in the world–bigger than entire countries and this reseller only sold regionally. We were able to unwind it–but what a mess!
Sample Models – avoiding Exclusivity “Many resellers will try to negotiate these when a vendor doesn’t have a formal program to lock up exclusive advantages.” It helps to see a model of all types of partner types so you can map what the partner does (and their respective value) to the typical margins. Unless it is a hard-to-get-into country, like Japan, I do NOT recommend exclusive deals. I had one vendor out of Australia that created an exclusive deal with a single reseller in California that got California, Nevada, and Oregon as an exclusive territory. There was a 3-year time limit but no performance clause. California is the 17th largest economy in the world–bigger than entire countries and this reseller only sold regionally. We were able to unwind it–but what a mess!
How to Determine Reseller Margins “When creating a reseller program, you always have to determine the margins for your affiliates (link referrals and referral forms), resellers (retail through VARs) and even white-label partners.” NEW! Want more info on how to set up your margins? Watch the VIDEO?
Determine margins for “like” products if you can’t find any exactly like yours. For example, if you sell enterprise software to IT, you might compare it to Oracle, Microsoft, etc. Find out as above. “Determine how much to pay (by level).” Examine what behavior you want to reinforce--do you want your resellers to support the account after the first year? Can they switch the customer to another product at the end of the year (if they don’t make any further commission)?
Review the Chanimal presentation, “How to Create a SaaS Reseller Program” (opens in a new window)- slide 32 on margins. You can also watch the video and go to time 47:39 where it talks about the channel and discusses the margins HERE at 49.15. “Compile competitors’ margins.” Who pays who? Do I place the order and pay you, or do you collect and pay me?Do you have levels?Where do you start? The lowest, or can we come in higher?What margins do you pay for each of the levels?What are the qualifications per level?How long do you pay?How soon do you pay?Do you have a partner program page that explains this or a document you can send?
Review the Chanimal presentation, “How to Create a SaaS Reseller Program” (opens in a new window)- slide 32 on margins. You can also watch the video and go to time 47:39 where it talks about the channel and discusses the margins HERE at 49.15. “You can sometimes find it on 1) your competitor’s website (Click Sample Reseller Margins – for an example (Xero accounting)), by 2) sending an email to the channel manager (use a generic email address), or even by asking a reseller about their program (some will send you the entire kit).” Who pays who? Do I place the order and pay you, or do you collect and pay me?Do you have levels?Where do you start? The lowest, or can we come in higher?What margins do you pay for each of the levels?What are the qualifications per level?How long do you pay?How soon do you pay?Do you have a partner program page that explains this or a document you can send?
Review the Chanimal presentation, “How to Create a SaaS Reseller Program” (opens in a new window)- slide 32 on margins. You can also watch the video and go to time 47:39 where it talks about the channel and discusses the margins HERE at 49.15. “You can often 3) Google it, “Microsoft margins,” or “How much margin does Microsoft pay,” “What is the commission for Microsoft,” etc. (try different combinations – often it is on a website and Google can find it).” Who pays who? Do I place the order and pay you, or do you collect and pay me?Do you have levels?Where do you start? The lowest, or can we come in higher?What margins do you pay for each of the levels?What are the qualifications per level?How long do you pay?How soon do you pay?Do you have a partner program page that explains this or a document you can send?
Who pays who? Do I place the order and pay you, or do you collect and pay me?Do you have levels?Where do you start? The lowest, or can we come in higher?What margins do you pay for each of the levels?What are the qualifications per level?How long do you pay?How soon do you pay?Do you have a partner program page that explains this or a document you can send? “Determine margins for “like” products if you can’t find any exactly like yours. For example, if you sell enterprise software to IT, you might compare it to Oracle, Microsoft, etc. Find out as above.” Determine how much to pay (by level). Examples: 10% affiliate, 20% authorized, 30% gold, 40% platinum? This is not the actual % – these numbers are only an example (competitive research will tell you). Tip: you will probably be a price taker (and margin taker) in a competitive market.
Compile competitors’ margins. You can sometimes find it on 1) your competitor’s website (Click Sample Reseller Margins – for an example (Xero accounting)), by 2) sending an email to the channel manager (use a generic email address), or even by asking a reseller about their program (some will send you the entire kit). You can often 3) Google it, “Microsoft margins,” or “How much margin does Microsoft pay,” “What is the commission for Microsoft,” etc. (try different combinations – often it is on a website and Google can find it). Questions to Ask: “Who pays who? Do I place the order and pay you, or do you collect and pay me?Do you have levels?Where do you start? The lowest, or can we come in higher?What margins do you pay for each of the levels?What are the qualifications per level?How long do you pay?How soon do you pay?Do you have a partner program page that explains this or a document you can send?” Determine margins for “like” products if you can’t find any exactly like yours. For example, if you sell enterprise software to IT, you might compare it to Oracle, Microsoft, etc. Find out as above.
How to Determine Reseller Margins “The white label can be more customized, but your affiliate and reseller margins should be consistent (imagine having 1,000 partners and each one has different terms and pricing–it is near impossible to manage).” NEW! Want more info on how to set up your margins? Watch the VIDEO?
Compile competitors’ margins. You can sometimes find it on 1) your competitor’s website (Click Sample Reseller Margins – for an example (Xero accounting)), by 2) sending an email to the channel manager (use a generic email address), or even by asking a reseller about their program (some will send you the entire kit). You can often 3) Google it, “Microsoft margins,” or “How much margin does Microsoft pay,” “What is the commission for Microsoft,” etc. (try different combinations – often it is on a website and Google can find it). Questions to Ask: “Who pays who? Do I place the order and pay you, or do you collect and pay me?Do you have levels?Where do you start? The lowest, or can we come in higher?What margins do you pay for each of the levels?What are the qualifications per level?How long do you pay?How soon do you pay?Do you have a partner program page that explains this or a document you can send?” Determine margins for “like” products if you can’t find any exactly like yours. For example, if you sell enterprise software to IT, you might compare it to Oracle, Microsoft, etc. Find out as above.
Determine how much to pay (by level). Examples: 10% affiliate, 20% authorized, 30% gold, 40% platinum? This is not the actual % – these numbers are only an example (competitive research will tell you). Tip: you will probably be a price taker (and margin taker) in a competitive market. “Examine what behavior you want to reinforce--do you want your resellers to support the account after the first year? Can they switch the customer to another product at the end of the year (if they don’t make any further commission)?” Over what period do you pay? a) over the first year, b) over a few of the years, c) over the entire life, c) in combination. Even enterprise pay after the first year – 20% maintenance fee, or upgrades.