Reseller Discounts for Annual Maintenance?


3

We offer our resellers (ones that actively go out and sell to customers) a 25% discount on software licenses.

We have just introduced an annual maintenance fee, at 20% of current list price at the time of renewal.

Is it standard practise to also give resellers a discount on the annual maintenance fee? It does seem 'fair' to me, but how much? 10%?

UPDATE A couple of great answers here already - thanks! I thought I'd try and clarify things based on some of the questions raised in those answers.

We deal with two general types of reseller - the type businesses use as a single purchasing point (big ones like SHI, Insight etc), and value added resellers that play an active role in selling.

We will definately not give any discount on maintenance to the 'pass through' resellers, so it's only the value added ones I want to even consider.

Our value added resellers will play an important part in ensuring that customers take out a maintenance agreement - and I suppose they are more likely to push it if there is something in it for them. Some will also act as first line support. Ultimately though we will do most of what the maintenance agreement is for (support and upgrades).

I'm thinking that 10% is perhaps a bit miserly, but the annual maintenance agreement will be an important revenue stream for us, so I don't want to give too much away. Maybe 15%?

If anyone has any specific examples of what other businesses are doing, that would be great :)

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asked Jun 4 '10 at 18:01
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Cocowalla
327 points
Top agency to build award-winning mobile apps: Utility NYC

2 Answers


3

It makes business sense to discount maintenance to resellers if they provide some level of service that reduces your maintenance costs. Another consideration is if the discounts contribute significantly to their selling of maintenance on your behalf.

In addition to discounts, we position our resellers to support our software on a fee basis as part of their services. In this way they have incentive to encourage the customer to have access to all the resources (advanced engineering help, upgrades, etc.) that our maintenance contract provides.

Because maintenance can be $100 to 10,000, the percentage discount to a reseller will vary enormously. We discount maintenance percentages less than the licenses and calculate the reseller amount on the total order to keep things in perspective.

answered Jun 5 '10 at 02:57
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Keith De Long
5,091 points

2

Base it on how much of a factor they are in selling the maintenance along with how much you are charging. If customers are having a difficult time understanding why they need to pay for maintenance and the resellers are actively involved in closing that business, you should pay them. How would you justify only giving 10% instead of 25% like the initial sale? Maybe your fee is minimal? Some larger applications charge 20% of purchase price for annual service agreements. Service plans are almost bringing in as much business as initial purchases. Obviously if no one is interested at 10%, you'll have to go hirer.

answered Jun 4 '10 at 23:22
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Jeff O
6,169 points

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