Business Models and Best Practices Best Practices III) Sales and Distribution Managing new distributions based on y...Managing new distributions based on your technology
Certain of your partners may want to create their own distribution of your program released under their own brand, their own licensing terms and their own pricing (e.g. VAR and OEM agreements).
Thanks to the sustainable software license, the VAR or the OEM can not just "fork" your technology, modify it and resell it under another name. They have at least to respect the pricing figures you determine in your business model and have to give you royalties for their use of your technology with their own customers.
However the sustainable software model is still quite interesting for such partners as they may easily integrate added value features on top of your technology (thanks to the open code base), recompile the whole and redistribute/resell it at an higher price. They also know that there will be some dedicated team of developers that will be in charge of improving the program on a long term basis.
Best Practice:
Clearly differentiate the "standard" edition(s) of your product and the other value added distributions.
Comments:
There is a risk of confusion if every partner can recompile your code base and resell it under another brand. One way to limit this risk is to require that a new distribution based partially, or completely on your technology should at least require a certain level of value added enhancements.
You may also require that the pricing should be at least a certain percentage higher than your standard edition. This can be considered as normal as you force the integration of additional value added features. Otherwise, if your partners can begin reselling some value added distributions based on your technology but for a similar pricing, you will face a competition problem. One will be interested any more to acquire your "standard" edition license if for the same price in another distribution there is the same technology available but with some extra features. So take care that other distributions do not compete with yours but are complimentary solutions.
Thanks to the sustainable software license, the VAR or the OEM can not just "fork" your technology, modify it and resell it under another name. They have at least to respect the pricing figures you determine in your business model and have to give you royalties for their use of your technology with their own customers.
However the sustainable software model is still quite interesting for such partners as they may easily integrate added value features on top of your technology (thanks to the open code base), recompile the whole and redistribute/resell it at an higher price. They also know that there will be some dedicated team of developers that will be in charge of improving the program on a long term basis.
Best Practice:
Clearly differentiate the "standard" edition(s) of your product and the other value added distributions.
Comments:
There is a risk of confusion if every partner can recompile your code base and resell it under another brand. One way to limit this risk is to require that a new distribution based partially, or completely on your technology should at least require a certain level of value added enhancements.
You may also require that the pricing should be at least a certain percentage higher than your standard edition. This can be considered as normal as you force the integration of additional value added features. Otherwise, if your partners can begin reselling some value added distributions based on your technology but for a similar pricing, you will face a competition problem. One will be interested any more to acquire your "standard" edition license if for the same price in another distribution there is the same technology available but with some extra features. So take care that other distributions do not compete with yours but are complimentary solutions.
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