Channel Partners : How to calculate their Cut/Commission


We are developing product which is SAAS based and is expected to launch by August 12. I am in the process of finding Channel partners/*.Partners, who would help me sell the product in respective countries, find prospects, negotiate deals and pursue in buying

With this background, below are my specific questions -

  1. This being a SAAS based product, i will be charging e.g. say 15$ per month/user. Now if i offer a channel partner a cut of say 20% then do i offer him that cut for certain number of years say first 3/4 years and then discontinue the cut and apply the same if he brings in a new customer. OR do i need to always cut him out through out the life of the product. For channel partner there is no maintenance cost associated, however this being a SAAS based, i will always have maintenance cost, so offering him life long cut is not fair at my end but will it sound lucrative to him? please advice.
  2. What is typical percentage in such deals?
  3. How to find channel partners?
  4. Any books or recommended readings on this topic?
  5. Also i have an enquiry where the person wants to re-brand the product under his own name He would pay me my price of per user/month and sell it at higher price. It certinely gives me more connects and more customers but i indeed end up competing my product itself. Any thoughts on this?


Products Partner Marketing Channel Commission

asked May 12 '12 at 13:26
Ameya Phadke
56 points

3 Answers


Good questions. I'll answer the last question first.

The inquiry is asking to white label your service. The decision and cost factor to consider when allowing a white-label should be part of the core business model. For example, an Identity and Authentication service provider, DuoSecurity, offers both a channel/affiliate program as well as an option to white label the solution. The benefit for the service provider is to offer a service as their own without significant capital investments. There are several companies that offer their services as a pure white label solution while others offer a hybrid model (like Duo). The decision to go white-label should not be taken lightly since there's potential for cannibalization to your own business.

First, what you call the program should be dependent on your business model. Here's an article that companies Channel Partners versus Affiliates. The name of the program is important because it conveys certain assumptions about size/maturity, structure, and up-side. At $15/user/mo, I'd guess that your service is more B2B but targets the SMB market. With that said, you're probably looking for affiliates or re-sellers as opposed to channel partners or a VAR.

Second, I'd recommend you review existing Affiliate/Reseller programs out there. RingCentral offers programs for both Affiliates and Resellers and their policies are clearly stated on their website. RingeCentral pays for leads as well as subscribers. However, instead of trying to match existing models, try to figure out the cost of acquisition of a new customer (individual or business). With a cost of acquisition of new customer, you can figure out what each new account is worth and pass that along to the affiliate for a qualified lead or successful conversion. An enterprise IT vendor might offer their channel partners up to 30% margin for the highest level partner. But the channel partner may be responsible for billing and invoicing as well as providing value-add services. However, the enterprise channel model assumes providing 30% off is easier than building/maintaining individual relationships with each of their customers.

To find channel partners, you'd have have existing relationships that you can leverage or build relationships with each partner. Examples of large enterprise IT partners include Verizon, Dell, CSC, ATT, Insight, CDW, and SHI. National reseller organizations include Accuvant, FishNet Security, and Dimension Data. Then there are plenty of smaller regional players in each market. To track down good partners for your service, try looking at competing products/services and the partners they enlist. From there, you can find similar companies through a simple Google/LinkedIn search.

As for publications, I'd recommend you review magazines such as CRN. Books on business models and sales models likely contain useful insights on structuring sales.

Good luck!

answered May 13 '12 at 04:41
401 points


I want to focus on question 3.

Who is your ideal channel partner? What would you like them to do for you in each specific market? Do you have any personal experience working with a channel? In my opinion, working with a channel is like instructing someone else on how to assemble IKEA furniture. Before you jump headfirst into a channel strategy, I'd recommend that you focus on finding partners in your local area that you can learn fro

answered May 13 '12 at 08:00
Daniel O'leary
21 points


I'd recommend that if you are new to selling SaaS through channels in general, that you may want to take a look at Joel York's site, and learn about the different types of models possible to employ based on your target market and the complexity of your product.

His site is Bottom line - there is not a one size fits all answer, and you should probably make sure you walk before you run. I think you will have a better idea after reading through the basics on Joel's site.

answered Jun 26 '12 at 02:31
Ed Mc Garr
21 points

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