Posted on by Jason Lemkin

We are a SaaS company. A larger partner of ours who sells a complimentary product wants to have their sales reps sell our product alongside theirs. They want 25-50% of the first year’s revenue. Should we do it?

This post is by Jason Lemkin from SaaStr


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Yes, probably.
  • The simplest way to think of payments to partners is as a marketing cost.
  • The reality is, it’s tough to acquire a good customer for < 20%-25% of your first year ACV anyway. So anything in this range is a good deal viewed as a marketing program.
  • What is much harder is when partners want an annuity, a piece of later years. If possible, avoid that.
If you keep a customer for 10 years, paying 25% of Year 1 to a partner is … nothing. Yes, probably.
  • The simplest way to think of payments to partners is as a marketing cost.
  • The reality is, it’s tough to acquire a good customer for < 20%-25% of your first year ACV anyway. So anything in this range is a good deal viewed as a marketing program.
  • What is much harder is when partners want an annuity, a piece of later
    . If possible, avoid that.
If you keep a customer for 10 years, paying 25% of Year 1 to a partner is … nothing. < div class="ui_qtext_embed thumbnail" data-video-provider="youtube" data-embed=" ” data-yt-id=”Jn32qh1ZIY4″ style=”background-image: url(‘https://img.youtube.com/vi/Jn32qh1ZIY4/0.jpg’);”>
The tough part ends up not being the 20%-25% to the partner. The tough parts are:
  • Double commission. You’ll probably also have to pay your own reps a commission to avoid channel conflict issues. This will double the cost, effectively. But it’s OK.
  • Dubious credit. Some partners want credit for customers where they really didn’t create the lead or relationship. This is super frustrating. But, Shopify, Apple and Salesforce charge everyone 20%-30%+, and they take revenue from every year, not just Year 1. So get a bit zen. If a partner gives you access, it’s not the end of the world to pay for it.
https://partners.salesforce.com/… View original question on quora The post We are a SaaS company. A larger partner of ours who sells a complimentary product wants to have their sales reps sell our product alongside theirs. They want 25-50% of the first year’s revenue. Should we do it? appeared first on SaaStr.