Our product is a platform for organizing health related games. Our customers are corporate wellness coordinators, and the games are played in the context of their company. One of our strategies is to recruit independent wellness consultants as resellers of the product. We're getting some interest, but I have no idea really on how to price it for them.
80/20 split? 50/50? Any guidance on this issue? I'm open to all opinions and perspectives, but if you have experience with this, please indicate that.
We have these models for the health and fitness plus the Newsprint publishing industries.
50/50 is high, especially if the reseller also makes their money from your system. They are kind of getting a double benefit.
Things to consider:
Variables for the big spreadsheet you need to build:
Well, that's a good question. We had a same question and to be honest we still don't know the right answer. If you go 50/50 you can get lot of resellers but it will reduce your income big time. (or not, depending on the product and customer costs). From other hand it is very good if you can go with 50/50 since that can bring lot of customers and resellers to spread a word out there.
We are now going on 80/20 and we will see how that will end up. Hope someone can help us all on this matter.
Are you still handling the sales directly and sending them a commission, or do they bill the customer and then pay you for the service? In the later case you could actually offload some admin costs to them, and another alternative then might be to simply set a "wholesale price" you give them (this can be based on volume, status, etc) and let them set their own margin, with some recommendations and marketing materials from you. If they have a really strong relationship with their customers and they can double their margins, good for them!
This doesn't sidestep the question entirely since you still need to figure out what prices customers will pay and how you get enough of that, but it might be a way to give them more control over their business.
If you really don't know enough to make a good decision at this stage it might be worth trying a couple of different models to see how they work out, and watching the initial resellers a bit before bringing on more so you can adjust the terms.
Price it so you make enough of a profit that going through the trouble of dealing with the reseller is worthwhile.
Only you know the costs per customer and all the information that you need to make that decision. =)
Another option is to hire sales people directly either for salary or for base plus commission. If you can make this work you will have people working for you who will be loyal to you alone and not to other products they are selling.
With all due respect to the many great resellers out there, some resellers don't care what they sell as long as they are selling enough stuff to make the revenue they need to survive. That's why some resellers add lots of vendors to their line card - it increases their chance of selling stuff. Even though it may not be your stuff.