Does anyone have any experience, good or bad, of selling through resellers such as SHI? There have been a few posts that touch on this in the past on this thread though nothing that gives a decent, Setting Reseller agreements 101. Would be brilliant if anyone was able to share their thoughts or even point me in direction of some good blogs/content.
Thanks in advance.
SHI have approached me a few times too as they do a lot of reselling for one of my products. Unfortunately, the margins are not high enough for me to really give them a better cut. Iād love to hear someone elseās experience on the topic.
Thanks Cheez, interesting.
Letās not get started on why your margins arenāt enough, why donāt you put your prices up and increase marginsā¦? 
When you say they have approached you a few times as they do a lot of reselling for one of your products, do you mean that they are selling your product and taking a cut of X? Why would you want to give them a better cut? Are they asking/demanding one? What would happen if you donāt agree?
Are you selling through them and getting revenue at the moment? (What I originally thought when I read your response)
OR
Are they approaching you with a āA company we wonāt name wants to buy your software and we will sell it for you if you give us a discount of Xā that you canāt justify with your particular product? (They seem to have some history with this. Not necessarily a bad thing if you are getting new customers at a profitable margin).
I actually did recently increase my prices so hopefully things will go well in that regard.
The process is like āhey, customer A wants to buy your software, do you give a reseller discount?ā āNoā āOK, weāll buy anywayā.
Recently, I guess because they have a bunch of sales over the years, they have approached me about taking a cut but I tell them no. On average, they buy about $1K of software from me per purchase.
Very interesting. How do they make money? If they pay full price for your software, they must either charge a big company for a āpurchasing serviceā or take a cut of the money the customer pays. I have heard from multiple sources that if you just donāt allow a reseller discount they will buy or you can offer a reseller discount on certain volumes.
Yep, that sounds about right. Why should I have to pay for the big company outsourcing their purchasingā¦
Andy nails it here - https://successfulsoftware.net/2009/03/18/the-two-types-of-reseller/
Is the reseller acting as an āoutsourced procurementā then why give a %? They have been told to āgo buy Xā by the end customer. Giving a discount or not doesnāt effect if they buy so why throw money away?
Truth is for the vast majority of us an agreement with a reseller wonāt do anything to increase sales.
Andy is the xkcd of the ISV world.
I love the term āValue subtracted resellerā - that has been my experience of them as a software provider / seller. I only sell 2-3 units a month through resellers (value ranging from $100-$5000 the latter more rarely than the former sadly), but it always involves more work that the customer just buying directly from me (for both myself and the customer).
In my experience it is typically larger corporates who have an agreement with SHI, Insight or someone else that all software much be purchased through them. The benefit for the purchaser is that the reseller deals with most of the paper work (W8-BEN-E for example), for paying a premium on the product.
The benefit for the seller? Yet to see one (the sale happens I suppose).
Of course sometimes the reseller manages to get a discount (when Microsoft sort of volumes are involved), but whenever I get an e-mail from a reseller asking for a discount I know its going to involve more work and am very tempted to give them a marked up price (havenāt yet).
There are also the odd small reseller (and small companies pretending to be big ones by using a reseller) who say things like āplease donāt send the customer the invoiceā, to which I typically reply āsure, but my prices are clearly shown on the web-site, your customer will see themā¦ā).
Anyway, for value subtracted resellers, unless they can provably increase your revenue (and you have a contract to go with that), Iād tell them to get stuffed when they ask for a discount
(Iām bitter about it as Iāve got two low value purchases going through resellers atm)
Allan
See the post I wrote about this topic linked in the @rhino post above.
In my experience resellers such as SHI vary from a minor pain (I would prefer to deal with the customer direct) to incredibly incompetent (canāt work out how to make a PayPal payment - really). I never give them a discount bigger than I would have given the end-user. They still buy.
The one place where they can be useful is dealing with red tape. For example, if a big US company or organization demands that they buy from a US company or want lots of paperwork filled in, then I tell them to buy via SHI.
I believe they add on a percentage. The fact that they sometimes ask you not to send your quote direct to the end-user makes me think that this percentage might be quite substantial. Serves the end-users right if their poor accounts department is too lazy to deal with us direct.
http://discuss.joelonsoftware.com/default.asp?biz.5.236074.13 is an interesting discussion on this. There are many there: https://www.google.com.au/search?q=+resellers+site%3Adiscuss.joelonsoftware.com
Interestingly I just got sent the invoice that the customer gave their client. My invoice to the reseller was for $549. The customerās invoice was $616. ~12% markup.
This just made me laugh - I have a reseller who wants to sell to another reseller, who will sell to their customer. For a ā¬109 sale the amount of paper workā¦
My best reseller storyā¦
I had a request for a quote for a renewal for an existing customer from a reseller. Nothing unusual there, as I have several customers who prefer to buy through resellers for admin purposes.
However, a couple of days later I got another request for a quote from a different person at the same reseller. I sent them the quote with a note: āThis is the quote I already provided to xā
Then I got a 3rd request from someone else from the same reseller. I said I had already supplied the quote to 2 people there, and asked if there was a problem?
They said no, but the customer was a government department and was required to get 3 quotes. They send the request for a quote to 3 different companies, but those companies all funnel the request through this 1 reseller, who then obviously go back to the one company (me) for each request.
Presumably each layer in this process is adding their own margin on top of the price I chargeā¦ your taxes at work!
Had this quite a few times too.