Software distributor or Sales Agent which one makes more sense?


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A company (which consist of one person) wants to sell my software (underour brand name and license agreement) but wants to do installation and 1st level support to the customer but doesn't want to invoice the customer (wants to be paid on commission) and wants to invoice us (software vendor) for the services he provided to the customer so we can bill the customer. So effectively he is a distributor and a supplier. So what type of agreement makes the most sense here? And any clauses I should be sure to have with respect to this type of arrangement?

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asked Feb 18 '11 at 04:22
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Stacey
484 points

2 Answers


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Distinguish between customers he finds and those you provide. I don't think he should expect any type of exclusivity on customers you supply nor get the same commission rate.

There should be guidelines for the level of support and service this person is going to supply. He is representing your software. If he wanted to buy the software from you and work directly with clients, that's a different story. You're going to be invoicing the customer and they'll call you to complain. You may want to consider having the customers call you for support and you can dispatch to this person. It is tedious, but you want to know if he is not taking care of the customers.

Find out what is expectations are for territory, etc. If you both live in the same area, this could present a problem if you want to hire a salesperson or another distributor.

answered Feb 18 '11 at 08:07
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Jeff O
6,169 points
  • Jeff, He doesn't want to sell our clients he wants to sell and provide these services ot his clients but seems to not want to take care of administrative aspects of it..That's why I am not sure what type of agreement... – Stacey 9 years ago

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That's an unusual arrangement - I've never heard of anything like it. It's kind of a weird mashup of a VAR, an independent commissioned sales rep, and a tech support contractor.

If he wants to get paid before his customers pay you... don't accept it. Since he would be qualifying the customers rather than you, he could easily peddle software and services to deadbeats, collect money from you for it, and leave you to chase the deadbeats for payments.

Unless he provably walks on water for other folks using this kind of arrangement, in your shoes I'd just offer him a standard VAR package and leave it at that. Sales channels have developed the way they have because they work, and innovations should be supported by a lot of justification which I don't see here.

If you do decide to go for this, here are a few suggestions:

  • Check his references and make sure he has this kind of arrangement with other people who are happy with him.
  • He should only get paid for sales or support after you get paid for it.
  • There should be penalties to his commission and support rate if his late-pay customers exceed certain levels. At some point, he should even lose his status with you.
  • If he has any kind of exclusivity, like a territory, he needs to meet sales goals to keep it.
answered Apr 19 '11 at 12:25
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Bob Murphy
2,614 points

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