Business Models and Best Practices Best Practices III) Sales and Distribution Managing a network of resellersManaging a network of resellers
The Sustainable Software business model allows the editor to charge a royalty on certain type of software execution (ex: for internal or commercial use). This means that the editor will now be able to control his network of Resellers, VARs or OEMs through some standard partnership agreements.
Best Practices:
Try to leverage the number of existing system integrators to rapidly create a network of partners (indirect sales strategy).
Implement some sales commissions and other partners rewarding programs.
Only offer sales commissions for customers that pay in cash.
Comments:
Your network of partners can be managed through some standard software reseller agreements. This has nothing to do with the fact that your software is released under a sustainable software license.
The key interesting points for resellers are:
1) They do not have to rely any more on a software editor to develop all the new features their customers may want as they have full access to the source code (no vendor lock-in).
2) They can develop themselves the new features wanted by their customers. Moreover they can make it without having to increase the TCO of their customers' projects as the editor has to accept payment in kind. This often means additional opportunities for the partners to resell more development services.
3) They do not have to buy any development license, to face some upfront cost or to fear to be impacted by some viral effect available in other open source projects to begin developing with the program.
To try to extend more rapidly your network of partners, another best practice would be to try to implement some viral effect by implementing a coaching or mentoring commission. Most of the small and mid-sized software editors do not have the pre-sales structure (in terms of subsidiaries, language covering,...) to directly support all the possible markets. One possible ways to handle that is to create a "mentoring" fee: any existing reseller can introduce and coach a new partner (provide assistance and training, make some pre-sales work,...). He will then have the right to get a commission on all the future sales of this newly introduced reseller. The newly introduced partner can of course do exactly the same with other new partners and so on...
The editor will of course have the right to refuse a new partner if he judges that for example he has not the required skills to provide a satisfying level of support on his product to customers.
The editor can also fix a maximum limit to the level of commissions he agrees to provide to intermediaries (for example max 50% of the value of the license).
Warning: the editor can control who is authorized to resell the software not who can redistribute it. Similar to classical open source licenses, distribution of "research and development" versions of the source code or of the compiled program is possible for everybody and for free. This is up to the end-user to contact the software editor or one of the authorized resellers to get a valid license if he needs one.
Regarding Software Piracy, of course your program's source code will be fully open. You can create some license key system but this will be quite easy for a developer to hack it as the full source code of your program is provided. But finally do you really believe that hackers need the full access to your source code to be able to create some key generator or other unlimited key file? Of course not. So if one of your users uses your software without respecting your license agreement, he is violating the law.
Best Practices:
Try to leverage the number of existing system integrators to rapidly create a network of partners (indirect sales strategy).
Implement some sales commissions and other partners rewarding programs.
Only offer sales commissions for customers that pay in cash.
Comments:
Your network of partners can be managed through some standard software reseller agreements. This has nothing to do with the fact that your software is released under a sustainable software license.
The key interesting points for resellers are:
1) They do not have to rely any more on a software editor to develop all the new features their customers may want as they have full access to the source code (no vendor lock-in).
2) They can develop themselves the new features wanted by their customers. Moreover they can make it without having to increase the TCO of their customers' projects as the editor has to accept payment in kind. This often means additional opportunities for the partners to resell more development services.
3) They do not have to buy any development license, to face some upfront cost or to fear to be impacted by some viral effect available in other open source projects to begin developing with the program.
To try to extend more rapidly your network of partners, another best practice would be to try to implement some viral effect by implementing a coaching or mentoring commission. Most of the small and mid-sized software editors do not have the pre-sales structure (in terms of subsidiaries, language covering,...) to directly support all the possible markets. One possible ways to handle that is to create a "mentoring" fee: any existing reseller can introduce and coach a new partner (provide assistance and training, make some pre-sales work,...). He will then have the right to get a commission on all the future sales of this newly introduced reseller. The newly introduced partner can of course do exactly the same with other new partners and so on...
The editor will of course have the right to refuse a new partner if he judges that for example he has not the required skills to provide a satisfying level of support on his product to customers.
The editor can also fix a maximum limit to the level of commissions he agrees to provide to intermediaries (for example max 50% of the value of the license).
Warning: the editor can control who is authorized to resell the software not who can redistribute it. Similar to classical open source licenses, distribution of "research and development" versions of the source code or of the compiled program is possible for everybody and for free. This is up to the end-user to contact the software editor or one of the authorized resellers to get a valid license if he needs one.
Regarding Software Piracy, of course your program's source code will be fully open. You can create some license key system but this will be quite easy for a developer to hack it as the full source code of your program is provided. But finally do you really believe that hackers need the full access to your source code to be able to create some key generator or other unlimited key file? Of course not. So if one of your users uses your software without respecting your license agreement, he is violating the law.
The contents of this website are licensed under the Open Software License 2.0 or Academic Free License 2.0
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