Types of Cloud Service Reseller Models
Cloud service resellers have, for long, been relied upon by software vendors for marketing and selling traditional software licenses. Even many businesses have started relying upon resellers rather than buying cloud services and products directly from the market as resellers bring certain benefits to them. However, the contract models and legal issues often make clients confused, which acts as a determent for choosing cloud services.
If you too have been trying to know more about cloud service reseller models, here are the key ones:
- Subcontracting model: In this case, the cloud service provider signs a contract for services with the reseller. The reseller, in turn, signs a separate contract with the customer for delivering services. In some cases, the reseller and the vendor may sign a single contract in relation to multiple customers. In other cases, for each reseller-customer contract, there would be an equivalent vendor-reseller contract, where the reseller agreement will act as a framework. This model is fit where the reseller’s objective is to bundle its own services with that of the resold services under a single customer contract.
- Assignment model: In this model, the reseller purchases quantities of contracts from the vendor, and subsequently sells them to its customers. In other words, the reseller, under the contract, assigns its rights and obligations to its customers. This is why it is called the “Assignment Model”. Customers who don’t want to deal with the legal burden of principal-agent relationship may choose this model.
- Agency model: According to the law of agency, agents can enter into contracts on behalf of their principals. Therefore, this model enables a reseller, appointed as an agent, to enter into cloud services agreements on behalf of its vendor. To offer the principal some protection, the contract can restrict the rights of cloud resellers to sign such deals on behalf of the vendor. Under this model, customers sign the contracts with the vendor. In case the reseller is also providing services or software to the customer, a separate contract should be signed to deal with those matters.
- Referral model: This is perhaps the simplest and most popular method. Here, the reseller refers customers to the vendor. These referrals are then tracked by the vendor. For every contract that a referred customer signs with the vendor, some benefits are granted by the vendor to the reseller, which is typically in the form of commission.
Since each of these models affects the relationships between resellers, vendors and customers, you should do your homework well before choosing any one of these.