Reseller commission

[Brown and Boris]

Morning

Quick one about commissions paid to resellers.


If I was selling a web based product, and used an associate network to sell to their existing customer base, what % commission might I expect to pay to that associate for that intial sale? What about subsequent sales I make to that customer, where the associate would no long have any service/relationship/sales responsibility input?

[V8mate]

Brown and Boris said:

Morning

Quick one about commissions paid to resellers.


If I was selling a web based product, and used an associate network to sell to their existing customer base, what % commission might I expect to pay to that associate for that intial sale?

Whatever you can afford which is sufficient to make it interesting as a proposition to them and still profitable for you.

Brown and Boris said:

What about subsequent sales I make to that customer, where the associate would no long have any service/relationship/sales responsibility input?

You really need to negotiate this with the reseller before any trading begins, as it could come back and bite you later if you don't. They may insist on a 'finder's fee' type arrangement which means that they will continue to retain a (smaller) commission payment on all goods provided to customers they introduced you too. Obviously, it's in your interest to try and negotiate so that you don't have to pay such a continued fee. Maybe you can do this by paying a larger commission on initial sales. So leave youself room in your negotiations to increase the commission level. But do have the conversation first, or it could end up a messy legal battle.

If you are not used to negotiating, it is often worth paying someone who is, to negotiate on your behalf.

[Brown and Boris]

I have it from both ends really.

I am about to licence a product which I will then also sell on behalf of the licence holder to my clients and get a sales commission and the licence fee. I think from discussions the resellers usually ask for between 10% and 20% (reasonable?)as they in reality are the only contact with the client, do the ordering, pay the supplier etc. In effect they just get the product at discount (10-20%) and sell it on at full price.

I have already started to market the product informally and have one very large potential user who, if they decide to buy after I sign the licensing agreement, I would like to get that initial and any continuing commission as I have been working on them for 2 years during development.