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We're developing an extension to a commercial open source enterprise software product. Most customers of the product we're extending buy it trough one of its system integration partners.

To reach these customers we want to partner with these system integrators to sell our extension. Of course they will only be interested in reselling if there's something in it for them.

These are the selling points I can think of:

  • Offer them a percentage of the price. How much is customary for this kind of deal?
  • It lets them differentiate their services from their competitors. Do we need to offer some sort of (regional) exclusivity?
  • We could offer our app as a white-label product and let them rebrand it.
  • It might allow them to sell more consulting and training services.

Our product is a hosted SaaS solution.

We also want to sell the product directly to customers that don't work with a systems integrator.

I will contact some of these companies soon but I want to have an idea of the possibilities first.

Does anyone have experience with this model? Advice, tips, caveats?

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2 Answers

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As a rule, they'd be most interested if they believe that your extension can help them close more deals, or bring more value to the solution they provide their customers. So that's probably your main angle, rather than the money they can make.

Commenting on your selling points:

* Offer them a percentage of the price. How much is customary for this kind of deal?

Assuming that they bring the customer and handle the training and support, probably 30%-40% of the price they charge the customer for the extension.

* It lets them differentiate their services from their competitors. Do we need to offer some sort of (regional) exclusivity?

You should only agree on exclusivity if they commit to minimum sales. Otherwise, you'll end up with some regions with no sales, and no recourse. Since they can't make minimum commitments for such a young product, I'd drop it for now. I guess, you can offer limited time exclusivity as an incentive, but that's probably low on the priority list. First you need to convince them that the product has value.

* We could offer our app as a white-label product and let them rebrand it.

Unless it's really easy for you to this, I would focus on the product at this stage.

* It might allow them to sell more consulting and training services.

That, would be the main attraction and the part I would focus on. Ideally, you'd get some beta customers that would testify to the advantages of your tool.

One other angle is to establish a relationship with one or more SI and have them involved in the specs of the product and tailor it to their needs. They'd then have a time and emotional investment in your product, and would be more likely to help you push it.

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It sounds like you haven't yet talked to these SI's to discover what they're pain points are. That's the next step.

For example, you talk about rev-share, but in my experience SI's usually can't make enough money on rev-share for it to be worth learning your tool. Rather, they typically make money through billable hours, so the better tack is to say "If you have your customer buy our tool, you can bill 100-200 hours for integration and training!"

In short, think about what their pain is and how they already make money, and see if you can play into that rather than invent something new for them to figure out and manage.

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