Don't Forget About Software Licensing, Page 3
Selling Through Resellers
Some especially smaller software companies rely on the direct sales model, where their products can only be bought directly from them. Yet, many software titles are also available through resellers, which can help to increase your sales and improve your marketing reach.
When you start building a channel, i.e. bringing resellers (or even distributors and resellers) into your selling equation, there are several things you need to be aware of. First and foremost, resellers are there to make a business from selling, supporting and/or training your products. Again, a good rule is to keep things simple and supportive.
Supporting means for one part, that resellers expect to have some kind of compensation for their efforts. This can be done with a direct discount from the price with which you sell the products directly. Alternatively, you could provide some kind of sales commission. For example, this might be based on quantities sold quarterly. It is also wise to put some marketing efforts into your budget, as you cannot expect the reseller to sell much if your marketing budget is non-existent.
When your reseller closes a deal, make it easy for him or her to send in the order. Remember to always keep the reseller in the loop when you send the order confirmation or the license keys, since the customer is likely to contact the reseller before contacting you. If there is a problem for instance with the license key, you want your reseller to solve the issue quickly.
It's also worthwhile to document your selling process. This benefits both the resellers and your customers. Remember to take the whole lifecycle into consideration: from buying and installing the product to using it and finally moving it to another user or computer.
When you have resellers and/or distributors in your business model, timely announcements about new products, changes in prices, and so on are key. At the very least, let your channel know about important changes several weeks before the fact, not the day after. Resellers likely have other products to sell than just yours, and you must respect that their focus isn't 100% in your products alone.
If customers are aware of your resellers, they can send in their quote requests to both you directly and your resellers. If you have multiple resellers, they probably can figure out proper pricing themselves. But since only you can determine the pricing level, it is important not to undermine the possibilities of resellers by selling lower than the channel. A direct sales person only looking for his quarterly bonus can bring down the motivation of the whole channel. Thus, you need a policy for such situations.
Software companies usually want to focus on their core business: development. However, all commercially operating companies need to have a revenue stream, and if it's selling the software, then you need to think about sales strategies. Software licensing is equally important than your business model (whether it contains a channel or not).
In this article, you learned about the different options and caveats of software licensing. Sometimes, licensing is an art form just like software development. The wealth of options and scenarios can be overwhelming at first, but once you start looking around, you will find that many other software companies have already tackled similar situations. It might just be that they use different vocabulary.
This article discussed different business models, including direct sales and selling through resellers. The more partners you have in your model, the more open your company needs to be. Keep the information flowing and train your channel.
These can be considered the starting points. Now, start tuning your own model!
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About the Author
Jani Järvinen is a software development trainer and consultant in Finland. He is a Microsoft C# MVP and a frequent author and has published three books about software development. He is the group leader of a Finnish software development expert group at ITpro.fi. His blog can be found at http://www.saunalahti.fi/janij/. You can send him mail by clicking on his name at the top of the article.