QWhiz

Founding AE / ex-SDR

Valued Contributor

45% ?

Week 5 as the Founding AE / Edtech startup. I recently sealed a deal with a school in Taiwan through a reseller for $1.3k.

Same reseller has now approached us with a significant multi-year district level proposal. District is keen to use funds from a recent Taiwan government initiative aimed at boosting digital learning.

A stupid f**k from our growth team, prior to my joining, had already shared our pricing tiers with this reseller. Agreement was to offer a 45% commission to reseller for all deals.

While this might have made sense for smaller deals, I'm questioning the logic behind offering the same rate for bigger, district-level agreements. Now, with this potential deal that could exceed $150k, the reseller is expecting the same 45% commission due to that earlier communication.

I'm in a tight spot. What to do here? I would get comped on selling price to reseller, not district/school.

🍾 Commission

14

28 comments

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Pachacuti

Politicker

11

They call me Daddy, Sales Daddy

55% of $150k is more than 55% of $0.

HVACexpert

Politicker

4

sales engineer

Exactly, not ideal , but better than nothing. Got bills to pay!

oldcloser

Arsonist

5

💀

Yep- and you’re cooked. Company gave it up. You ain’t getting it back.

GDO

Politicker

2

BDM

My tought exactly. On the other hand more nego power is always better

Sunbunny31

Politicker

6

Sr Sales Executive 🐰

Might have to bite the bullet, but it may also be time to put some parameters around this program and formalize it.
As in, you're happy to honor the %, and appreciate the business they brought to you. That said, it's going to be for a limited time as your company ramps up (and come up with a time frame - 1 mo? 3 mos? 6 mos?). Then the % will go to 25% (or whatever is reasonable, discuss with your manager). Let them know that you're hoping they come through with a lot of deals to maximize the higher percent.
The benefit will be: you will take care of the partner by honoring the agreement. You should be viewed as an honest and honorable rep that they'll want to do business with.Hopefully this will actually lead to a lot of deals, even at the higher comp % - you have a high quota, and this will help you retire that. Building a business with a partner is a great way to get into the market you might not otherwise.Also, by putting a framework around the % and a timeline for ending it, you're respecting your own business and incentivizing that partner to close things with you quickly (which is better for your quota).

QWhiz

Big Shot

1

Founding AE / ex-SDR

So what you’re saying is that I bite the bullet for this mammoth, but next time onwards keep decreasing the % commission?

Sunbunny31

Politicker

3

Sr Sales Executive 🐰

Pachacuti pointed out that 55% is better than 0%, so while 45% is high, it is better than getting nothing.
But what I'm proposing is that you consider the longer term relationship. Do you want to establish an ongoing relationship with this reseller, where they bring you business (you might not otherwise get)? If so, how do you see that, and what do you want to get out of it? If 45% is high, what % can you live with?
You could honor the previous rep's % deal in order to begin to work on the relationship, but establish that it's for this deal only, and ongoing, the % will be (whatever you want it to be - 30? 30?) and that you look forward to working with them. I'd let them know up front that you'll honor the % for this deal only (or for a limited time, or whatever you want) in order to get the relationship started and underway. Remember that in these cases, the partners generally do most, if not all, of the work, so it's another avenue towards your success. You have the ability to grow this relationship - it's up to you.
I wouldn't overcomplicate things. It's sales. They're bringing you a deal. The terms aren't great for this one, but you have the opportunity to make a better deal if you want. Handle it well, and you may be very successful.

jefe

Arsonist

5

🍁

That's an absurd commission percentage for any partner.
It's insane to expect that on a $150K deal, and probably even more insane to have ever offered it.

QWhiz

Big Shot

0

Founding AE / ex-SDR

I know. What do I do though?

jefe

Arsonist

0

🍁

Try and negotiate, hope they're reasonable, but realize you have no leverage.

HVACexpert

Politicker

4

sales engineer

If he put that in writing to the reseller without additional terms or limitations you might be SOL.

CuriousFox

WR Officer

2

🦊

Was it in writing? Have you seen proof?

QWhiz

Big Shot

0

Founding AE / ex-SDR

It was. I have

QWhiz

Big Shot

0

Founding AE / ex-SDR

Should I drown him?

Phillip_J_Fry

Opinionated

4

Director of Revenue

Ehhhh, I've had similar margin percentages go to a major US reseller on a 7 figure deal before.
The fact is that your company is small and unknown. In order to get a reseller to pitch your product, you are going to have to heavily incentivize them.
Until you have an established foothold in the industry, you're going to have to pay your dues to the resellers to get your name out there. My thought process is that something is better than nothing. Especially so, if you had no contacts, no progress in this account and the reseller is literally handing you his book of business.

QWhiz

Big Shot

0

Founding AE / ex-SDR

Hmmmm. Fair

saaskicker

Celebrated Contributor

3

Enterprise AE

You looking for any other resellers?

QWhiz

Big Shot

0

Founding AE / ex-SDR

We have another reseller in Taiwan. But this one is publicly registered and traded company, and the other one seems shady tbh

Diablo

Politicker

3

Sr. AE

overall 45% is too much, how is company planning to sustain long term?

QWhiz

Big Shot

0

Founding AE / ex-SDR

I joined last month, I actually don’t know. But this is the first time we’re trying to expand into international territory

LambyCorn

Arsonist

2

A mfkn E

I learned that if comission is almost half; most probably a scam so its 100% profits. I hope its not the case here but scammers work on a 40/60 split, so its insane margins since everything is profit since there is no product xD

QWhiz

Big Shot

0

Founding AE / ex-SDR

I couldn’t agree more. I’ll lost 80k on a 180k deal if they go for a 5-year contract

braintank

Politicker

2

Enterprise Account Executive

45% for a small deal is bad too

QWhiz

Big Shot

0

Founding AE / ex-SDR

Any suggestions on what I can do here ?

pirate

Big Shot

2

🦜☠️ Account Executive

Probably wouldn't get those deals without reseller involvement. Like you're 5 weeks in. It's not your deal. It's reseller deal

QWhiz

Big Shot

0

Founding AE / ex-SDR

Agreed. I’m not being a greedy ass here. Just looking for ideas if sth can be done

ThatNewAE

Big Shot

2

Account Executive - Mid enterprise

If the company is trying to penetrate into a new market, word of mouth and the resellers' play a very important role. 45% sounds bad, exaggerated and unfair too - but there would be some ROI you would be getting out of this deal, both long term and short term.

You wouldn't give 45% to another reseller in the same market few weeks down the line. But you'd have to give 45% to this new reseller in a new market for the first time.

QWhiz

Big Shot

0

Founding AE / ex-SDR

we already gave it the first time, for a $500 deal. I feel this is unfair since the pricing was shared with them before my watch started. Not unfair - FRUSTRaTING

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