Reseller Pricing means, partners purchase the company's products or services at a discounted price and resell them to end customers at a markup. The partner's revenue is the difference between the discounted price they pay and the price they charge to end customers.
How Reseller Pricing Works
Reseller pricing is a chain that starts at the vendor's list price and ends at what the end customer pays. In order: the vendor sets a list price, the partner gets a discount (usually set by partner tier, volume, or contract terms), the discounted price is what the reseller pays to buy, and the reseller then sets its own end customer price. The reseller's gross profit is the spread between the buy price and the end customer price.
There are two structures. In direct pricing the vendor sells straight to the reseller. In two-tier pricing the vendor sells to a distributor, who sells to the reseller, and the wholesale distributor takes its own cut, typically 3 to 7% (Chanimal). Deal registration can add extra discount on a deal the reseller brings in, which protects the partner that did the work.
How the discount is structured matters as much as its size. See the static and dynamic pricing models for the two main approaches, and set deeper discounts for partners who earn them through partner tiering and 4C qualification.
Margin vs Markup: An Illustrative Calculation
These two get mixed up constantly, and the difference changes the number. Both use the same dollar profit but a different denominator:
- Margin = (selling price minus buy price) / selling price
- Markup = (selling price minus buy price) / buy price
Illustrative calculation with round numbers, not a real company. Suppose a product lists at $100 and the reseller buys at a 30% discount, paying $70, then sells at the $100 list price. Profit is $30. The margin is 30 / 100, which is 30%. The markup is 30 / 70, which is about 43%.
So a vendor and a partner can both say "30%" and mean two different things. When that happens, program economics get misstated. Always say which one you mean. For how margin feeds the wider picture, see partnership profitability.
What Reseller Margins Look Like in Practice
There is no single "right" reseller margin. It depends on what the reseller actually does. A few sourced reference points:
- Cloud hyperscaler resale: resellers typically receive only 2 to 10% margin, per Canalys, reported in Computer Weekly's MicroScope.
- Maintenance and support agreements: 10 to 25% on average, with 20% the most common, per Chanimal.
- Software affiliate margins: typically 10 to 15%, per Chanimal.
The pattern is consistent. Pure product resale sits at the low end, and margin grows as the reseller attaches its own services. For when a distributor tier changes the math, see deciding when to work with distributors.
Frequently Asked Questions
What is a good profit margin for resellers?
There is no single number. Canalys puts cloud hyperscaler resale at 2 to 10%, while Chanimal puts maintenance margins at 10 to 25%, with 20% most common. Margins rise when the reseller attaches its own services rather than just passing on the vendor's product.
How do you calculate reseller price?
Start from the vendor list price and subtract the partner discount to get the buy price. The reseller then sets the end customer price. Margin is the spread between the two divided by the selling price. See the illustrative calculation above for the arithmetic.
How does cloud resell work?
A reseller buys cloud services at a program discount, either directly from the vendor or through a distributor, and resells them at its own price. Profit comes from the discount spread plus any services the reseller attaches, such as setup, management, or support.