August 25, 2003 5:04 PM

Will I moved this thread to Sales and Distribution... I think your question is beeter answered there.

I've never heard of anything like what you are mentioning.

I don't care how much MDF money is available, dealers and distributors still like to make margin.

I doubt the world has changed by that much.

Jim Geisman

[COLOR=DarkRed][B][URL="http://www.softwarepricing.com"]Software Pricing Partners, Inc.[/URL] [COLOR=Black]+508-647-0330[/COLOR][/B][/COLOR]

August 26, 2003 6:19 AM

a list price of say, $109, and a reseller offering the program for $104.75, or even $109. What is the incentive for the reseller?

I'm missing a piece of the logic here. How do you know what the reseller is PAYING for the software? How do you know they are not getting it for 40% or 55% less than $109?

August 26, 2003 10:59 AM

Because they can? :)

I don't know your software, but it probably isn't a standard-bearer like many Adobe titles, so your resellers are using price cuts to move product; Adobe resellers don't need to.

I mean, it's not like people walk into Wal-Mart and compare alternatives to Acrobat, nor do they (most of them, I suspect) drive from store to store looking for the best price on Acrobat.

At the same time, Adobe (and other biggies) don't have to give the same cuts to resellers that Joe's Software does, and they have a lot more power in fixing prices. I know, I know, that's illegal, but there are ways. If you're a Mac shop, for example, do you want to incur the wrath of Adobe and risk them yanking your ability to sell Acrobat, FrameMaker, Illustrator, Pagemaker, and Photoshop?

Also, there MAY be a trend here away from resellers -- at least among the big software companies. More and more software is sold over the Web, and if I were Adobe, I'd be asking myself daily, Just what are these resellers doing for us? Why don't we take all that reseller money -- discounts and ad co-ops -- and spend it on driving people to our own online store?

I don't think resellers will ever be eliminated, but, just as in software, the little guys are likely to get squeezed. Adobe can't afford to snub Best Buy, CDW, Office Depot, et. al., but they probably can afford to put pressure on Joe's Mac Shop with less generous discounts, etc.

August 26, 2003 1:55 PM

Hi,

I have another business where I resell and install broadband satellite systems. I make most of my money on the installation or in the "Value-Add". Does it make sense for your resellers to be more like VARS and add a service where they can earn more money?

My 2 cents worth...

Joe

August 26, 2003 2:51 PM

I noodled on that one as well Joe, but this product doesn't appear to have the complex implementation requirements that most Value Added Resellers or Systems Integrators are seeking to offset the low price point and total sales revenue.

It also appears (based on the above) that Will, and company, have selected the high volume corporate resellers who stack 'em high and let 'em fly in lieu of the tradtional VAR or SI partners. If I'm mistaken on this point Will, please enlighten.

Perhaps if they had a "Professional" or "Enterprise" version that worked in a J2EE environment, or drew data from multiple source points, there would be a call for Portal skills or something more technical than multiple desktops - but I didn't see that.

Which brings up an interesting point worth touching on. Yesterday's VARs have been forced to evolve or face demise by identity crisis.

Today they're competing with the large online retailers, and Direct Sales by Dell, HP-Compaq, et.al. for product sales, and the Systems Interators for product services. The middle-ground, once dominated by healthy VARs has turned to quick sand and swallowed them up.

A few neighborhood VARs remain, but their annual volume and industry visibility is too far below the horizon to make suitable partners for a Vendor attempting to increase sales through this Channel.

Ken Beam, The VAR-City -- "Channel Start-Up Specialists since 1995" Phone: 972.240.8793 or kbeam@thevarcity.com

August 26, 2003 6:00 PM

Now its my turn. Remember one thing, there are two kinds of resellers. Those who serve a market and those who help make a market. You need to understand the difference between the two and acknowledge that difference in your channel partner plan.

For example, if you expect a reseller to help you make a market, what is your discount structure? 25%, hmmm you go and try to make a market on those margins.

Those who are just serving a market can make money at 5, 6 or 7 points. It is tough, but you know the adage, they make it up in volume.

It sounds to me like your reseller is merely serving a market you are making. That is, you are creating the demand through some form of marketing, however formal or informal. Then your customers (don't ever forget that the end-user is your customer .... not the reseller) go to your reseller to pick up your product.

Hang on a second, you are drop shipping to your customer?! Just what value does your reseller bring to the table? If your customer might just otherwise go to your web site, your reseller is neither serving your market, nor is he making market. He's just skimming points. Anyone can make a living off of one or two points with that level of involvement.