Uncovering The Software Reseller Business Model: A Comprehensive Analysis

Organizations continually seek innovative ways to meet their software needs efficiently and effectively. The software reseller business model has emerged as a compelling solution in navigating this complex path.

Software reseller program acts as a broker of a sales channel, reshaping how software is acquired, implemented, and managed. It comes with its own set of benefits and pitfalls, which this article explores.

We delve into the intricacies and advantages that position it as a significant influence in today's digital landscape.

In recent years, the global software reseller market has experienced rapid growth. This is mainly due to the growth of software companies in the world. Easy accessibility of software, especially SaaS products, has led to an increase in software companies.

The emergence of cloud services has been a game changer for the software industry. With the rise of cloud computing, ample software products are available in the market and can be purchased directly from suppliers. However, some software companies have made it mandatory to obtain software products exclusively through the software reseller business model.

This post will discuss the various benefits and flaws in the software reseller business model. But before we dive into the details, let's take a closer look at this model and its fundamental components.

What Is The Software Reseller Business Model?

The Software Reseller Business Model is a strategic approach in the IT industry where organizations act as intermediaries between software manufacturers or developers and end-users. Essentially, software resellers acquire software licenses or products from vendors and then resell them to customers, often adding value through services, support, and tailored solutions. This is what is referred to as “white labeling.” White labeling is a common practice in the software reseller industry, allowing resellers to brand and market software solutions as their own, enhancing their value proposition to customers.

Key Components of the Software Reseller Business Model:-

• Software Procurement: Software resellers acquire licenses or products from software vendors through direct partnerships or distributor relationships. This component involves negotiating pricing, terms, and agreements with vendors.
• Value Addition: Resellers often add value to the software they sell. This can include customization, integration services, training, technical support, and consulting. These added services enhance the software's appeal to customers.
• Sales and Marketing: Resellers employ sales and marketing strategies to reach their target audience. This may involve identifying customer needs, developing marketing campaigns, and building a sales team to promote and sell software solutions.
• Pricing and Profit Margins: Determining pricing strategies is crucial for profitability. Resellers must balance competitive pricing with the need for profitability while considering factors such as volume discounts and licensing models.
• Market Research and Demand Analysis: Understanding market trends, customer demands, and competitive landscapes helps resellers decide which software solutions to offer and how to position them.
  
  The Software Reseller Business Model involves acquiring, enhancing, marketing, and selling SaaS products or licenses to customers while providing additional benefits and support.

Benefits of the Software Reseller Model

The software reseller model offers numerous advantages for their customer base. Here are some key benefits:

• Expertise and Consultation: Software resellers often possess in-depth knowledge about the products they offer. They can provide valuable insights and recommendations to customers, helping them make informed decisions about which software solutions best meet their needs.
• Access to Diverse Product Portfolios: Resellers typically have access to a wide range of software products from various vendors. This allows customers to choose from a diverse selection of solutions, ensuring that they can find the right fit for their specific requirements.
• Cost Savings: Resellers often negotiate volume discounts or special pricing with software vendors, which can result in cost savings for customers. Additionally, customers can avoid the expense and difficulties of directly managing software vendor relationships.
• Simplified Procurement: Resellers streamline the software procurement process. Customers can obtain multiple software products from a single source, simplifying the purchasing and licensing process.
• Value Added Services: Many resellers offer value-added services such as installation, configuration, training, and ongoing technical support. These services can be invaluable to customers, especially those with limited IT resources.
• Customization and Integration: Resellers can often provide customization services to tailor software solutions to a customer's unique requirements. They can also assist with the integration of software into existing IT infrastructures.
• Efficient Licensing: Resellers help customers manage software licenses efficiently, ensuring compliance and preventing legal issues related to licensing violations.
• Vendor Agnostic Advice: Reseller service providers can offer unbiased advice since they work with multiple vendors. They prioritize finding the best solution with additional services for you rather than promoting a single vendor's product.
• Relationship Management: Resellers maintain relationships with software vendors, which can be beneficial in resolving issues, obtaining updates, and ensuring access to the latest software features.
• Risk Mitigation: Resellers can assist customers in assessing risks associated with software choices, ensuring they invest in solutions that align with their long-term goals.
  
  Thus, the software reselling model offers numerous benefits to organizations seeking to acquire, manage, and optimize software solutions. It simplifies the procurement process, provides access to expertise, and offers added-value services that contribute to efficient and cost-effective software management. This model continues to play a vital role in helping businesses harness the full potential of software applications.

Drawbacks & Flaws Of The Software Reseller Business Model

Despite its advantages, the software reseller model has drawbacks that challenge the conventional approach to procuring SaaS and other software products for businesses. It constrains options, escalates costs, and complicates the involvement of the actual team or stakeholders in the purchasing process.

As software consists of a large portion of the organization's spending for any business, procuring software from a reseller partner will lead you to increase your IT spending. Based on each sale of software, resellers earn their commission or referral fee. Therefore, they often make you purchase the software at higher prices and in more quantity for maximum gain. This is just one aspect; let's delve into a few more:

1. Limitations In Software Supply

There are thousands of software companies and products available in the market. But resellers will have partnerships only with a few of them. Therefore, they will be unable to offer the other products to the buyers.

For example, CDW Brand Partners offers software reseller services for various software companies. But if you are looking for a specific brand like ServiceNow as an IT asset management software, it is not available in CDW.

There are more than thousands of software companies available in the market. On the contrary, finding a software reseller with all offerings is rare. Any software reseller will have tie-ups with only a few companies and can offer limited software products.

Also, the chances are higher that your software reseller can't provide you with the software product you need or meet your business requirements. Due to this, you'll be restricted to the software choices the reseller offers.

Further, the software resellers may try to convince you to procure a software product that will not meet your business requirements. In this case, getting convinced will lead you to make wrong decisions and pay for unproductive software.

2. An Increase In Your IT Spending Will Boost Resellers' Earning

The SaaS reseller earns a commission based on the selling amount and quantity of software products sold. The more they sell, the more they make. The earning model of a software reseller is the biggest drawback.

For example, if you purchase a software product of $75k, then there is a possibility that resellers will earn $5k to $30k as their commission on the purchase. This commission basically is going from your pocket.

When you procure a software product from the reseller, the amount they charge you consists of their commission. In this way, the more you pay, the more resellers earn, and your SaaS spending increases.

Note that we are not saying resellers should not get anything for the value they generate. We just want to highlight that in the current, there is a complete misalignment in incentives.

3. Fails To Engage The End Users

To market software to enterprises, software resellers often interact with IT departments, although these departments may not always be the ultimate users of the acquired software.

On the other hand, software procurement is done best when the actual users are involved in the decision-making process. This plays a crucial role in purchasing software. If anything goes wrong, the business may have to deal with losses or hurdles in operating the regular tasks.

For instance, you desire to purchase marketing software, and IT teams decide without the involvement of the marketing team. There is a chance of misalignment between the actual requirement and the procured software, as the marketing team will better understand their requirements.

Moreover, when the IT team gets involved in procuring software for other departments, there is a complete mismatch with the actual needs of the department. It brings you to a backward zone when dealing with software resellers.

Zluri: Your SaaS Procurement Partner

Any inappropriate software procurement can significantly impact the overall business. With Zluri, you can have a better SaaS procurement and avoid inconvenience with software resellers. Zluri simplifies the SaaS procurement journey with its extensive SaaS buying platform.

Our team of experts understands the intricacies of the software market, allowing you to assist your organization in making well-informed decisions. We work closely with you to identify the software solutions that best fit your needs, ensuring you get the most value from your investments.

Zluri's team of SaaS buying experts has designed a streamlined SaaS procurement process that engages your procurement team, finance department, and individual requesters. This approach guarantees full transparency throughout the SaaS procurement journey, eradicating any unexpected surprises.

Zluri provides an AI-driven SaaS management platform that deeply understands your SaaS landscape. It delivers valuable insights and enhances your negotiation capabilities. It offers real-time access to your purchase history and aids in strategic SaaS procurement planning for the upcoming 12 months. We aim to enhance your comprehension of your annual SaaS acquisitions and renewals. Zluri's access to a vast database of 1 billion SaaS transactions empowers us with knowledge about fair pricing for various software types and their prices.

Yet, Zluri's SaaS procurement isn't merely an outsourcing service; it functions as an extension of your in-house procurement team. We collaborate closely with you to ensure transparency and build trust. Our team takes the initiative in vendor communication on your behalf, using your email for complete transparency.

For instance, Zluri played a pivotal role in assisting a prominent cybersecurity firm in saving a substantial $500,000 and conserving 400 hours during their SaaS procurement process. Similarly, in just a span of 5 months, Zluri effectively reduced expenses for MoEngange by more than $250,000.

Take a quick look at Zluri's standout SaaS-buying USPs:-

• Offers the largest app library that meets your requirements: With over 250,000 apps, Zluri has the world’s largest app library. Hence, you can get a wide range of SaaS apps that meet your business requirements. This will also save the time you spend searching for and procuring apps.
• Optimizes your overall SaaS budget & spending: Zluri offers SaaS buying services that purchase and renew all your SaaS apps and reduce your software expenses. Our SaaS purchasing services help you save time and money. How?
  
  Well, as discussed, we have the benchmark data on SaaS prices, bringing data-backed insights. The insights help us to gain knowledge on fair pricing and provide you with the SaaS apps of your choice at the best deal. It allows you to run your business smoothly as there is a complete alignment between the SaaS tool's requirements and usage.
  
  Negotiation prices depend on various factors like which license tier is required, how many licenses are required, and many more. These factors are associated with the requirements of your whole organization and its departments.
  
  We will help you with the savings and support you in negotiating the tools for the best price. Additionally, we help you remove unutilized licenses or duplicate apps from your existing subscriptions.
  
  We offer zero upfront cost. This means you need to pay us only when we assist you with 2x savings. So the amount you save is double what you pay us for the service. This is what we promise you savings. We grow when you save.
  
  For example, if we guarantee and save you $36000, you pay Zluri $18000. But if the saving is higher than the amount we guaranteed, you still pay us the same amount.
  
  Moreover, we help you save by planning and designing your SaaS buying. Zluri's renewal window period presents a compelling value proposition, offering potential savings of up to 50% on subscriptions while completely eliminating any upfront costs.

• Direct involvement of your end users through EAS: With Zluri’s employee app store (EAS), you can involve the end users (like your employees, department heads, or any other users) in software procurement. For example, when procuring a new SaaS app for communication and collaboration, you can involve the department heads, procurement, and finance teams to make better and more strategic decisions.
  
  Employee app store facilitates the creation of a SaaS approval workflow and streamlines the entire process of requesting, approving, and revoking SaaS app licenses.

• Furthermore, EAS is connected with our SaaS Buying service; if you want to procure SaaS at better pricing and terms, then you can get it on your own. This means if a particular app has been approved, you can use Zluri's SaaS buying to help you get the best possible price for a SaaS contract. You can choose who would be involved in the approval process and their role. Involve department heads, app owners, etc. This leads to better collaboration among approvers.Also, it saves countless hours for IT and procurement teams on repetitive tasks of purchasing software licenses.

• The IT and procurement team would no longer be flooded with app requests daily. On the other hand, the employees need not wait for weeks and months to access the SaaS apps they need. This streamlined license approval process ensures there is no delay and that employees can get instant access to SaaS apps once approved.Additionally, with EAS, you can get information, such as security & compliance details and app alternatives. It will help you to make an informed and strategic SaaS purchase decision. Moreover, it saves time that would have gone into researching the app and evaluating them.

• SaaS buying is tricky, and you may find yourself stuck at several steps. Book a Zluri demo right away to simplify the process!

Also Read:Top 8 Software Reseller Programs