What to remember about Saas Reseller Agreement and SaaS OEM Agreement Models!
There are essentially 3 different SaaS channel models: referral, reseller and OEM, which are documented in a referral agreement, SaaS reseller agreement and SaaS oem agreement. I discuss these three reseller models a lot with clients, so I thought this topic deserved a brief outline of the differences between the models (here is another post on the types of SaaS reseller agreement models).
Referral Agreements.
SaaS referral agreements are essentially models where the referring company ‘refers’ or introduces new leads to the SaaS vendor.
If a SaaS vendor closes a deal with the new lead, then the SaaS vendor pays the referring party a % of the deal for a certain period of time (usually 1-2 years; the duration really depends on the vendor’s business model and the sales contribution of the referring party). The SaaS vendor sets the price and the referring party does not. In these deals you have to think about issues like tail payments (if you terminate the referral agreement early, often the referring party would like some kind of continuing payment) and exceptions to the referral fee obligation (like active or known deals, etc). Some people also call this agreement an ‘affiliate agreement’ which is fine, but I think a referral agreement is a more accurate description.
Reseller Agreements.
SaaS reseller agreements are for situations when the reseller will resell the SaaS vendor’s service AND collects the $ from the customer.
The reseller sets the price with the customer, and you determine the price to the reseller (i.e. the reseller makes the margin). Often the SaaS vendor will still contract directly with the customer for its service, but the order and $ still flow through the reseller. Also the reseller usually provides level 1 support, implementation services and training, but this really depends on the SaaS vendor’s model and technology.
OEM Agreements.
SaaS OEM agreements are designed for the situation where the SaaS solution will be re-branded for the OEM company, and where the OEM company usually provides level 1 support, implementation and training services.
The OEM company sets the pricing to the customer, and pays a pre-determined price for the SaaS vendor’s service. Often but not always the OEM company commits to things like a minimum spend over per year or to train a certain number of its employees on the SaaS solution.
Ok, so this is a short outline of the differences, but I thought that it is worth mentioning some of the key characteristics of each model. I can tell you that there are no hard and fast rules, as I have often seen a channel agreement which operates as a hybrid of two of the models. So remember, think through your model first, as the agreement should reflect (not define) your SaaS channel model.
Resources:
Did you know the US Supreme Court Changed Reseller law in 2007?
What customers expect in their SaaS Agreements!
Disclaimer: This post is for informational and educational purposes only, and is not legal advice. You should hire an attorney if you need legal advice, which should be provided only after review of all relevant facts and applicable law.