NetSuite Dangles the Ultimate Carrot: CashBy Carolyn April | Posted 2010-03-03 Email Print
For a limited time, SaaS player NetSuite will pay partners 100 percent margin on the first year’s sales value of a new customer subscription for its business software.
In an effort to woo more solution providers into selling its cloud-based business software, SaaS pioneer NetSuite is making an offer it hopes the channel can’t refuse: Cold, hard cash.
For a limited time, NetSuite will pay partners 100 percent margin on the first year’s sales value of a new customer subscription, with 10 percent margins on renewals thereafter. The company’s existing revenue-sharing model – which remains in place – pays out 50 percent margins on a first-year subscription sale, with 30 percent for annual renewals.
Craig West, vice president of channel sales at NetSuite, says the incentive is aimed at helping the channel overcome some of its reticence about the cloud-computing business model by answering the fundamental question on everybody’s mind: How do I make money off this?
"It’s grown clear to us that traditional midmarket VARs are not embracing cloud," said West. "Whether it’s because of FUD from vendors that they can’t make money in the cloud or something else, it’s apparent they can’t figure it out."
By frontloading the margin dollars partners receive, West says they will have the means to build a solid cloud practice. One of the impediments to moving to the cloud has been the challenge and cost of reorienting a longstanding business model. West hopes a cash infusion will lower that barrier to entry.
"We are trying to take the difficulty out of making this decision and building a cloud practice," he said. "With 100 percent margin, they can pay their sales reps’ commission, pay for retraining, and make more money long-term. This is a great thing for them."
NetSuite will extend the 100 percent offer to its existing partners as well, but the real goal is net-new partner acquisition, West said. The offer, which will likely remain available for a month or two, will apply to all subscription deals closed over a 12-month period. After that, payment on deals moving forward reverts to the 50/30 model, he said.
NetSuite’s SaaS-based software spans CRM, ERP, e-commerce and inventory solutions, and they compete head-to-head with the likes of Salesforce.com and Microsoft.