What constitutes as “good” partner margins is an ever-changing metric. Even though partners often don’t make a substantial amount from margins, what are reasonable rates a partner can expect to receive?
In this episode of P2PNow, we break down what’s considered good and bad, what your return on partnership when working with a vendor should be, and more. Watch the session below or read on for the full transcript!
Christian: Today’s episode will be an interesting one…what are “good” Partner Margins from a vendor?
I feel like this is a changing standard that’s been shrinking lower and lower. Does that sound about right Sam?
Sam: 100%. When we started to develop the AvePoint Partner Program, we set out with the intent to make it a “Next Generation” Partner Program. While there are a lot of factors we had to consider, the biggest revelation was how partners made money with vendors.
Christian: Based on your tone I’m guessing it’s not through margins?
Sam: That’s correct. Large vendors like Microsoft and AWS have been shrinking their margins slowly but surely year over year.
The reason is that Partners are making the majority of their money not on the resale, but the services that are bundled with the vendor’s tools.
Christian: That makes sense. Getting back to the question through. Even considering this shift in how partners make money, what are reasonable rates a partner can expect to receive?
Sam: I’ll start with an evil phrase in consulting… “it depends.” What you should really be considering when looking at margins is – what is the return on partnership working with this vendor? But to be more specific:
Large companies like Microsoft and AWS have by far the tightest margins, sometimes as low as 3%. However, they also have the largest brand and resources impact.
If you become a Microsoft or AWS certified partner you’ve added a massive amount of credibility to your organization. Also, these licenses aren’t cheap, so even with tighter margins if your company is selling at a certain scale it can make a difference.
SaaS companies that’re AvePoint’s size can be closer to 15-20%. While the software capabilities might not be as expansive, we offer advanced training and dedicated account management. This will ultimately allow you to complete more sales to make that margin stand out.
We’re also introducing rebates and MDF programs that can take the total $ amount received well beyond 20% of total sales for a year.
Now, some vendors with on-prem solutions will go up to 30-35% on margin. However, if you go with one of them, you’d then have to deal with the cost of setting up and maintaining the backend. So you’ll need to factor that into the return on partnership.
Christian: You know, when you phrase it as “return on partnership” you begin to see that margins don’t make up the entire story.
Sam: Absolutely. Can you actually speak with a team member from the vendor? Are you getting rebates? Is MDF an option? What services can you develop with this solution? Does the vendor share leads? What’s your Better Together story?
Don’t take a slide deck as an answer either. Ask to get involved and see how difficult it is to actually use these programs. This should all be factored in when you’re considering your return on partnership. Partner Margins are just a small piece of the puzzle.
Christian: That’s very insightful. I’m sure there are a lot of folks that get hung up on one number and don’t take the entire relationship into account. AvePoint is working to create more and more opportunities for our partners, to increase the “Return on Partnership,”
As always, to find out more about AvePoint’s Partner Program, visit www.avepoint.com/partners.