A Detailed Guide on Software Reseller Model

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Thinking about becoming a reseller? It’s a great choice—but it’s more than just selling.

The software reseller model is a smart way for companies to sell software and earn profits without building the product themselves. In the software reseller model, a company develops the product, and resellers purchase it in bulk to sell to end customers.

Resellers earn a profit and often add value through setup, support, and expert guidance. However, they’ll also need to handle customer service and help clients use the software effectively.

To make things easier, tools like CloudEagle.ai offer outsourced procurement services and expert negotiation to help you get the best software deals.

In this guide, you’ll learn more about software reseller models and how to get started the right way to become a reseller.

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TL;DR

• A software reseller buys licenses from vendors and sells them to end users, earning profit while adding value through setup, training, and support.
• Resellers purchase software (often in bulk), sell it at a markup, and offer post-sale services. Creators benefit by extending reach without building sales teams.
• Common models include Direct, Indirect, Tiered, and White Label, each offering different levels of control, branding, and profit-sharing.
• Pros include faster market access, localized support, and reduced workload for creators. Challenges involve vendor relationships, pricing strategy, licensing compliance, and keeping up with product changes.
• CloudEagle.ai streamlines vendor research, contract negotiation, compliance, and procurement workflows, helping resellers close deals faster and smarter.
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1. What Is A Software Reseller?

Before learning about software reseller models, you first need to understand what a software reseller is.

A software reseller is a strategic partner that purchases software licenses from developers or vendors and subsequently sells them to end-users. Resellers earn a profit by selling the software at a higher price than what they paid.

But they don’t just sell, they also add value by offering services like setup, system integration, user training, and ongoing support. Because they understand both the software and the market well, resellers help customers get the right solutions for their needs.

For software companies, working with resellers means faster growth and access to new markets without building a sales team from scratch.

Here’s how it works:

• Purchase: The reseller buys the software, usually in bulk. They often get a discount or a special deal from the original creator.
• Sell: The reseller then sells this software to their customers, often at a higher price than they paid. It helps them make a profit on each sale.
• Support: Many resellers also help their customers by setting up the software, providing training, and answering questions. This extra support can be very helpful, especially with complicated software.

Software resellers and distributors might seem similar to people, but some essential differences exist.

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2. Who Are Software Distributors?

Software distributors manage the distribution and sales of software products from developers to end users. Their role involves various tasks such as marketing, selling, and providing customer support for the software they distribute.

They often work with software developers to understand their products, manage inventory, and handle transactions. Distributors can also offer added value through services like training and technical support.

Software distributors connect creators with a broader audience, streamlining sales and offering localized support. Their work ensures that software reaches users efficiently and effectively, significantly impacting the industry.

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3. Why Do Customers Want To Work With Resellers And Distributors?

With various software reseller models available, resellers and distributors simplify the buying, implementation, and support process for customers. Here’s why customers value them:

a. Expertise and Support: Resellers offer personalized advice and support. For example, a reseller can help organizations choose the right accounting software and set it up for their needs.

b. Wide Product Availability: Distributors carry many software options from different vendors, so customers have more choices. For instance, they might offer multiple cybersecurity tools to suit different needs.

c. Faster Delivery: Distributors manage logistics and ensure the timely delivery of software licenses, reducing delays and keeping business operations smooth.

d. Extra Services: Resellers often provide training, setup help, and customizations. For example, they may offer workshops or tailor a project management tool to fit your workflow.

e. Broader Reach: Distributors work with many resellers, so software becomes available in more regions and industries, helping customers find specialized solutions easily.

f. Better Pricing: Distributors buy in bulk and pass on the savings. Resellers can then offer competitive pricing, giving customers better deals on software.

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4. How Does the Software Reseller Model Work?

The software reseller model allows organizations to sell software through intermediaries, known as resellers. Here’s a simple, step-by-step explanation of how it works:

a. Software Creation: A company, often called the software creator, develops software. This could be anything from a business tool to a SaaS app.

b. Partnering with Resellers: Instead of selling software directly to every customer, creators often collaborate with resellers. This approach helps overcome challenges such as language or regional barriers.

c. Reseller Purchase: Resellers buy the software from the creator, often in bulk. Because they are purchasing a large quantity, they might get a special deal or discount.

d. Reseller Sales: The resellers then sell the software to their customers at a markup to earn a profit. However, they also offer extra services, like setup help or training, to make the software more valuable.

e. Customer Support: The software resellers are responsible for helping their customers with the software. This means they handle things like installation, troubleshooting, and answering questions.

f. Ongoing Relationship: The reseller continues to provide support and sometimes updates or upgrades to the software. They keep in touch with their customers to ensure everything is running smoothly.

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How does the software reseller model work?

The software reseller model allows businesses to sell software through intermediaries, known as resellers. Here’s a simple, step-by-step explanation of how it works:

1. Software creation: A company, often called the software creator, develops software. This could be anything from a business tool to a SaaS app.

2. Partnering with resellers: Instead of selling software directly to every customer, creators often collaborate with resellers. This approach helps overcome challenges such as language or regional barriers. Resellers are skilled in selling and supporting software, making the process more efficient and effective.

3. Reseller purchase: Resellers buy the software from the creator, often in bulk. Because they are purchasing a large quantity, they might get a special deal or discount.

4. Reseller sales: The resellers then sell the software to their customers at a markup to earn a profit. However, they also offer extra services, like setup help or training, to make the software more valuable.

5. Customer support: The software resellers are responsible for helping their customers with the software. This means they handle things like installation, troubleshooting, and answering questions.

6. Ongoing relationship: The reseller continues to provide support and sometimes updates or upgrades to the software. They keep in touch with their customers to ensure everything is running smoothly.

Differences between software resellers and value-added resellers (VARs)

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5. Types of Software Reseller Models

Different types of software reseller models exist. Here are the main ones:

A. Direct Reseller Model

In the “Direct Software Reseller Model,” a reseller buys software directly from the software creator and sells it directly to end customers. This model is the most straightforward because it involves only the software creator and the reseller.

How do these models work?

Suppose a company called TechSoft develops a popular project management tool called ProjectPro. TechSoft wants to expand its reach, but handles only some sales directly. To do so, it partners with a reseller named OfficeSolutions.

OfficeSolutions buys licenses for ProjectPro directly from TechSoft at a discounted rate. They then sell these licenses to small businesses at a higher price, providing customer service and support. OfficeSolutions benefits from the markup they add to the cost, while TechSoft benefits from the increased distribution without having to manage every sale.

Advantages

• Resellers have complete control over the sales process and customer interactions.
• Potential for higher profit margins since resellers set their prices.

Pros

• Ability to offer customized solutions and support.
• Build strong, personal relationships with customers.

Cons

• Resellers must handle all aspects of sales and support.
• Requires significant time and resources to manage the sales process and customer service.

B. Indirect Reseller Model

The “Indirect Software Reseller Model” involves a layer of intermediaries between the software creator and the final customer. The software creator sells to a distributor, who then sells to resellers, and these resellers sell to the end users.

How do these models work?

Let’s consider DataGuard, a company that creates a sophisticated cybersecurity tool named SecureNet. Instead of selling SecureNet directly to resellers, DataGuard sells it to CyberFlow. CyberFlow is a middleman and supplies SecureNet to various resellers, such as SecureTech and NetSafe.

These resellers then market SecureNet to businesses, offering additional services like setup and training. The indirect model helps DataGuard reach a broader market by leveraging the distributor's and resellers' networks.

Advantages

• Access to a broader customer base through a network of intermediaries.
• Less direct involvement in sales and customer support, reducing operational burden.

Pros

• Easier to scale sales efforts through multiple resellers.
• Resellers often have local market knowledge and customer relationships.

Cons

• Limited control over the sales process and customer interactions.
• Profit margins may be lower due to reseller commissions or margins.

C. Tiered Reseller Model

The “Tiered Software Reseller Model” involves multiple levels of reselling, creating a hierarchy or tier structure. Each tier in the hierarchy resells the software to the next level, often adding value or additional services.

How do these models work?

Imagine AppMasters, a company that develops a comprehensive data analytics tool called DataWizard. AppMasters sells DataWizard to a top-tier reseller called Analytica, which in turn sells the tool to a second-tier reseller named DataInsight.

DataInsight sells DataWizard to smaller regional resellers or directly to end customers. Each level of the tiered model adds a layer of distribution, allowing the software to reach a wider audience through a structured chain of reselling.

Advantages

• Allows multiple levels of resellers, expanding market reach effectively.
• Each tier can earn commissions or bonuses, motivating them to drive more sales.

Pros

• Access to a broad network of resellers at different levels.
• Each tier’s incentives align with increased sales efforts.

Cons

• Managing and coordinating between multiple tiers can be challenging.
• Commissions and bonuses across tiers may reduce overall profit margins.

D. White Label Reseller Model

In the “White Label Software Reseller Model,” resellers purchase software and then rebrand it as their own product. The original creator’s brand is hidden, and the end customer sees only the reseller’s branding.

How do these models work?

Let’s say TechCreations has developed a versatile customer relationship management (CRM) software called ClientCare. A reseller named BizManage buys ClientCare and rebrands it as BizCRM.

BizManage then markets and sells BizCRM to businesses, presenting it as their proprietary solution. Even though TechCreations created the software, end users only know it as BizCRM, which helps BizManage build its brand identity and customer loyalty.

Advantages

• Resellers can rebrand the software with their logo and name, offering a customized product to their customers.
• Quick to market with a pre-built product, saving time on development.

Pros

• Ability to create a unique product offering under your brand.
• Focus on marketing and sales rather than software development.

Cons

• Less influence over the software’s features and updates.
• Reliant on the original creator for software maintenance and improvements.

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6. Key Benefits of the Software Reseller Model

The software reseller model benefits both software creators and resellers, including:

a. Wider Reach: Resellers help expand your software’s reach through their existing networks. This leads to higher visibility and more potential sales.

b. Less Work for Creators: Resellers manage sales and support, reducing the workload for software creators. This lets creators focus on product development.

c. Local Market Knowledge: Resellers understand regional needs, regulations, and buyer behavior. They tailor sales strategies for better customer alignment.

d. Added Services: Many resellers offer training, support, and setup services. This added value improves customer satisfaction and loyalty.

e. More Sales Channels: Each reseller can target a different industry or region. This opens up new revenue streams and broader market access.

f. Focus on Innovation: With resellers handling go-to-market tasks, creators can focus on building and improving their software. Innovation remains the priority.

g. Shared Risk: Resellers share the cost and risk of customer acquisition. This reduces the financial burden on the software creator.

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7. Challenges and Risks in the Software Reseller Model

The software reseller model offers many benefits but also comes with challenges.

A. Managing Relationships With Software Vendors

Building and maintaining strong relationships with software vendors can be challenging. Resellers must communicate and collaborate effectively to stay informed about product updates, support issues, and other important changes. This ensures they can provide accurate information and support to their customers.

For example, suppose a reseller is not in regular contact with the software vendor. In that case, they might need to be made aware of important updates or changes to the software, which can lead to service disruptions for their customers.

B. Balancing Margins And Pricing Strategies

Resellers must balance pricing the software competitively and maintaining healthy profit margins. They must account for their costs while ensuring their pricing remains attractive to customers. Setting prices too high may drive customers away, while setting them too low might erode profit margins.

For instance, if a reseller overestimates the market rate and sets a price too high, they may lose potential sales to competitors. Conversely, pricing too low might not cover the costs of added services or support, reducing profitability.

C. Navigating Complex Licensing Agreements

Software licensing agreements can be complex. These documents have various terms and conditions regarding usage, distribution, and compliance. Resellers must understand and manage these agreements to avoid legal and operational issues. Misunderstanding or mismanaging licensing terms can lead to legal disputes or compliance issues.

D. Maintaining Product Knowledge And Training

Resellers must keep up-to-date with the software’s features, updates, and best practices to provide effective support and successfully sell the product. Ongoing training and product knowledge are crucial.

Suppose a reseller is not knowledgeable about the latest features or changes to the software. In that case, they may struggle to address customer queries or provide accurate information, impacting customer satisfaction and sales.

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8. Streamline SaaS Procurement with CloudEagle.ai

SaaS procurement isn’t just about buying software anymore, it’s about finding the right apps, fast-tracking approvals, managing SaaS compliance, and reducing costs. CloudEagle.ai simplifies and streamlines the entire process with:

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A. AI-Powered Vendor Research

Most SaaS vendor research begins with Google or review websites. That’s slow, fragmented, and doesn’t give you context. CloudEagle.ai solves this by letting you type your business problem in plain English—like "need a GDPR-compliant email marketing tool"—and instantly surfacing a shortlist of relevant vendors.

Key Capabilities

a. Search in Plain English: Just type the business problem you’re solving, and CloudEagle.ai’s AI will shortlist the most relevant SaaS vendors instantly. No complex filters or endless searching.

b. Access to SaaSMap Database: Get comprehensive coverage with CloudEagle.ai’s proprietary SaaSMap, featuring half a million SaaS vendors across categories and industries.

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c. Discover New & Innovative Vendors: Stay updated with emerging tools. CloudEagle.ai continuously adds promising new vendors so you never miss out on high-value solutions entering the market.

d. Peer Collaboration & Shortlisting: Reach out to peers for input. CloudEagle.ai lets you email your shortlist to internal teams or trusted contacts for validation before making final purchase decisions.

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e. Curated, ML-Powered Reviews: Skip generic review sites. CloudEagle.ai uses machine learning to surface the most relevant, concise reviews with clear pros and cons—right inside your vendor dashboard.

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f. Side-by-Side Vendor Comparison: Compare vendors in a structured, visual format—by price, features, support, security posture, and more. Make confident decisions with a full picture.

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Learn how CloudEagle’s analysis of over 10 million reviews helped Falkonry choose the right vendor.

B. Streamlined Procurement Workflows

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Traditional SaaS procurement is slow and scattered—requests get lost in email chains, approvals are delayed, and compliance checks are skipped. CloudEagle.ai fixes all that by automating and centralizing the entire procurement workflow from intake to approval.

Key Capabilities

a. Centralized Request Intake: No more scattered email requests. Users can submit SaaS purchase requests via a single intake portal, ensuring every request starts in the right place and follows a standardized process.

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b. Role-Based Approval Workflows: Automatically route requests to the right stakeholders—IT, security, legal, finance—based on roles and purchase types. This eliminates bottlenecks and ensures compliance every step of the way.

c. Built-In Compliance Routing: Security reviews, legal contracts, finance checks—all integrated into the workflow. Every department gets notified automatically when their input is required, helping you stay compliant without delays.

d. No-Code Workflow Templates: Pick from a library of pre-built, no-code procurement workflows or create your own based on your internal policies. From intake to vendor onboarding, everything runs smoothly and consistently.

e. Slack for Procurement: Speed up approvals directly from Slack. Users can raise requests, receive alerts, and tag approvers right in Slack, eliminating email delays and moving procurement forward faster.

Read this inspiring success story of how RingCentral consolidated SaaS management and procurement with CloudEagle.

C. Seamless Slack Integration

Employees don’t want to log in to yet another platform just to request software. That’s why CloudEagle.ai integrates directly with Slack—so your teams can manage procurement tasks from where they already work.

Key Capabilities

• Employees can request tools or licenses directly in Slack. No need to log into a portal or fill out long forms. Just type a simple command or select from pre-configured options to initiate a request.
• Approvals and reminders are sent via Slack notifications. Approvers receive real-time alerts and reminders inside Slack, helping them take timely action without needing to dig through emails.
• Procurement, IT, and Finance can approve or comment within Slack. Stakeholders can collaborate, provide input, and approve requests without leaving their communication platform.

This seamless experience improves adoption across departments, reduces friction in the procurement cycle, and ensures that requests move forward without unnecessary delays.

D. Outsourced Procurement Support

Is your team stretched thin or scaling too fast to manage every vendor negotiation? Let CloudEagle.ai’s expert procurement team handle the operational load so you can focus on what matters most. We act as an extension of your team, helping you procure faster and smarter.

Key Capabilities

a. Vendor Research & Shortlisting: Save hours of research time. Just tell us the problem you’re solving, and our team will shortlist the right vendors using our AI-powered SaaSMap (500,000+ tools). We’ll present a curated list based on your industry, company size, and tech stack.

b. Contract Negotiation: Get the best deal without the back-and-forth. Our SaaS buying experts negotiate on your behalf—using historical benchmarks, market pricing, usage data, and deal history to drive savings and favorable terms.

Example: Need a Zoom Business Plan? We’ll connect with the vendor, discuss usage patterns, and secure the best rate possible.

c. License Consolidation & Renewals: Avoid duplicate licenses and shadow IT. CloudEagle.ai helps consolidate licenses across departments and manage renewals proactively. We track usage, eliminate underutilized tools, and ensure timely renewals at the right price.

d. RFP & Quote Collection: From collecting multiple quotes to managing RFPs, we streamline the entire process. CloudEagle.ai does the outreach, gathers responses, and brings you the best options—without you lifting a finger.

e. Maximize SaaS Savings: Our team doesn’t just buy, they negotiate with precision. By analyzing seat counts, app usage, and benchmarking data, we ensure every dollar spent on SaaS delivers maximum ROI.

E. Real-Time Price Benchmarking

One of the biggest hurdles in SaaS procurement is price transparency. Without knowing what others are paying, you're negotiating in the dark. CloudEagle.ai removes that blind spot with real-time price benchmarking backed by billions in transaction data.

Key Capabilities

a. Benchmark with Confidence: Not sure if you're overpaying for tools like Salesforce or Zoom? CloudEagle.ai shows what similar companies are paying, based on license count, contract length, and per-seat cost. You get real numbers to back your negotiations.

b. Curtains Up on Pricing Intelligence: CloudEagle.ai’s SaaSMap is an AI-powered database of 500,000+ vendors, updated weekly with insights from 3.5B+ data points, expert inputs, real contracts, and live transactions. It gives you the most accurate, up-to-date pricing benchmarks for smarter negotiations.

c. Fact-Check Your Spend: CloudEagle.ai instantly checks if your SaaS pricing is fair. It compares your contracts to market benchmarks so you can flag overpriced renewals, justify costs to stakeholders, and ask vendors for discounts with proof. For example, you will get notified if your Zoom licenses are above market rate, with suggested pricing to target.

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d. SaaS Buying Guides: We don’t just show you prices, we guide you to them. CloudEagle.ai’s SaaS buying guides walk you through how others negotiated similar deals, what clauses to watch for, and how to frame your pricing ask.

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F. Self-Service App Catalog

Procurement and IT teams often get bogged down by repeated queries like:

“What apps can I use for project management?”

“Can I get access to Zoom?”

“Who do I contact for a new tool?”

CloudEagle.ai solves this with a centralized, self-service app catalog that simplifies access, standardizes tools, and reduces IT back-and-forth.

Key Capabilities

a. One Catalog, Total Visibility: CloudEagle.ai gives employees one place to browse all pre-approved apps by category, team, or use case. They can request access or purchases with a single click and track request status easily. If an app isn’t available, recommended alternatives are shown—no confusion or delays.

b. Accelerate Access, Eliminate Delays: Software access delays hurt productivity. CloudEagle.ai removes the wait by giving employees instant access to approved tools based on company policies. Tools like Zoom or Asana are just a click away—no more bottlenecks.

c. Smart App Recommendations: CloudEagle.ai suggests the best-fit tools based on the user's department, role, and use case, helping them choose the right app without second-guessing.

d. Right Person, Right Access: Access levels are pre-configured by role and department, ensuring that employees get the right tools with the right permissions—no more manual provisioning errors.

e. Say Goodbye to Shadow IT: With a clear, accessible catalog, employees no longer install rogue tools or bypass IT. This dramatically reduces shadow IT risks and enforces purchasing consistency across the organization.

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Listen to Lucas Dermois, IT Systems Architect at Iceye, in this testimonial where he shares how CloudEagle’s support with contract negotiations helped them achieve significant savings.

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9. Conclusion

Working with software resellers helps companies reach more customers without handling all the sales and support themselves. This software reseller model offers big benefits like a wider reach and less workload.

But it can also come with challenges, like managing relationships and pricing. With clear communication and good support, these issues can be solved, leading to strong partnerships and business growth.

Resellers can make the process even easier with procurement tools like CloudEagle.ai. It helps find the best software deals, speeds up buying, and gives useful market data. With features like assisted buying, resellers can feel confident going into any negotiation.

Book a demo with CloudEagle.ai to see how it can help you save time, money, and grow faster.

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