Questions

What terms re-sellers use for selling SaaS?

We are a SaaS company and want to make a contract with resellers, anyone knows what conditions are usually used? For example how much reseller takes and for how long? Do they have to commit to do a number of sales?

4answers

A reseller typically purchases the SaaS at a discounted price and bill their client directly.

I've seen reseller discounts range between 10% and 50%. The discount should be competitive with your industry, and allow a reasonable ROI for resellers. The reseller discount is typically for the life of the user otherwise expect resellers to offer their clients a competitor's SaaS.

An affiliate or partner program that pays a commission for referring clients creates a direct relationship between your company and the users. In these types of programs, your commission could be a one-time payout upon referral, a recurring % of sale for the first year, or a recurring % of sale for the life of the client.


Answered 6 years ago

I'd echo Mick's answer but also add that I like to split 'Resellers' into two different buckets for SaaS.

1. Pure Resellers
These folks purchase the SaaS product (to show commitment to selling it) and then spend time re-selling the product. They DO NOT do anything else besides sell and provide referrals. Generally they are commissioned similarly to your sales people, but can provide a discount so they can make their margin.

2. Value Added Resellers (VARs)
These people buy your product, sell it (and get a commission), but then also do implementation for the people they sell it to. The money maker for VARs is being able to charge for professional services (which can often be much more expensive than the SaaS product itself). You should discuss how much they charge for services (you don't want there to be a huge discrepancy in how your product is implemented), but this will definitely vary between VARs.

The exact terms and payment amounts can vary depending on your product but hopefully these two distinctions can help with the way you approach structuring terms.


Answered 5 years ago

I run CloudChoice we resell for Freshdesk. I agree with both Chris and Mike. Given the SaaS licensing model, you typically setup a recurring commission. It varies from (10% - 35%). The percentage can vary depending on the expertise of the reseller. If the reseller can handle product demo, provide first line support and on-board clients.
You will have to create other revenue opportunities like implementation/training for the reseller as the recurring revenue in the SaaS world is not significant. Hope this helps, give me a call if you need further assistance.


Answered 5 years ago

It varies quite a bit depending on the type of SaaS business. For sake of answering this with something specific, I'll assume that this is going to work like some of the enterprise reseller/referral agreements I have seen. Since this is new for your business, when writing your reseller agreement, consider leaving specifics of the standards you plan to hold them to out of the contract, but mention that they might, or will, be communicated. In the termination section, give yourself termination for convenience with a short period of notice. This gives you complete flexibility in terminating the agreement without trying to guess before you start signing partners what the issues are going to be. I hope this helps, but let me know if I missed the mark or you want to talk more.


Answered 4 years ago

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