Many US structured HRIS, HR and HRMS software vendors sell their products through resellers. They benefit from having an array of other folks selling their systems and the reseller benefits by having the chance to earn high margins and consulting dollars. Lots of the leading HR software and business software companies sell their systems through what’s called a channel, partners, or VAR’s, which is short for value added reseller.
Basically, these are separate 3rd party businesses that sell, support, and offer implementation and training services on the HR software vendor’s systems. I created this informative article to provide some advice for anyone who is considering entering this kind of business. Under the channel business model, the prospective VAR will pay some form of upfront fee to the HR software vendor for training on the machine, the right to sell the machine and the capability to earn commissions. Owner might offer leads but most don’t. You shall be expected to cover most, if not all, of your overhead and marketing costs.
The reward is really as you sell these HR systems, you can receive high margins because you are taking all the risk. If you sell anything never, the vendor has still collected your start up fee. HR Software margins can range between 20 to 60 percent of software and 10 to 20 percent of annual support revenue.
If you, or your staff, perform all the implementation and talking to services to get a new system up and running, you will obtain 100% of the consulting fees. Consulting fees for training and execution can run up to 50% of the full total cost of the software and annual support.
Add in the margins and do the math and you’ll quickly see that it does not take way too many offers to earn a good income. 45,000 upon conclusion of the engagement. If the client have been kept by us, we’d have made additional future income from that client, as well. A decade ago, HR software sales was a much easier industry than it is today.
When asked which kind of system they were using, the frequent answer back then, for even 500 or larger worker sized companies, was they didn’t have a functional system. They were doing everything manually or on spreadsheets. It was a fairly easy sell to consider someone from the organizational dark ages to the 20th century. Today This is not the case.
- Users are adopted in Yammer only, not within Dynamics CRM
- Immediately Liquidate Slow Moving, Obsolete & Damaged Inventory
- 25% or more of its paid up share capital is held by one or more body Corporate and business
- Sweep-In Facility
A significantly higher percentage of companies now own something than did fifteen or even ten years ago. There has been a recent motion where vendors are bringing sales internal. This implies as a reseller, you are also competing with the HR software supplier and you may expect not to receive as many leads, if any.
During my this past year as a VAR we noticed great reductions in merchant provided leads. The leads go directly to the internal sales force not the resellers. If you are going to achieve success as a HR software reseller, you will have to become a specialist in marketing to be able to create your own leads.
All of this does take time. As a new VAR, you might perfectly not see a check for six months at the earliest. Think about this time line. As a fresh VAR, you will market the HR system for at least three to four months before you start to generate any real leads.
Once you involve some valid leads it will take 3 to 4 months at a minimum to close some of them; then you’ve still got to complete the consulting before you get paid completely. As a fresh VAR, be prepared to cover all working costs and marketing costs for at least nine weeks before looking to see any revenue.