A couple of months ago I joined hands with a reseller in order to expand my business. Actually, he approached me with an impressive sales profile. I agreed to sell my services through him by giving him 15% commission of the total sales done by him. So it was basically an 85/15 ratio partnership.
As the time passed, I saw an increase in sales figures. I was quite happy about it but happiness does not stay long. The reseller started asking for a high rate of commission. He demanded 25% whereas in our agreement it was clearly stated 15%. I discussed it with him but he did not agree and kept on demanding 25%.
Since sales have increased so I did not want to lose his services. He has started negotiating with me on a daily basis now. This was sending the wrong message to our existing customers also.
As I have been thinking of a solution for the last couple of weeks, an idea came to my mind and I immediately discussed it with my reseller. He agreed to it too. It was a win-win situation for both of us.
Could you guess my idea? I am sure if you are in sales you should guess it right otherwise it's a challenge.
Now, my business is going smoothly.
The IDEA was:
I started offering my services at an 'x' cost and asked him to sell it by adding up his own margin.
Product "A" costs me $10, I added my profit of $5 in it. So now I sell it for $15 to my reseller and he can add any amount to it as his profit depending on the situation.
Simple yet practical for both the parties.
What is your view about it? Have you ever experienced such kind of situations? How did you find the solution for it.?
I would be more than happy to read and discuss your views.