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Why should I buy from specialty resellers

Eric Sink linked to the blog of Mike Schinkel who runs Xtras.Net a specialty reseller of .NET components.

http://blogs.xtras.net/mikes/PermaLink,guid,daa1e487-18b5-4080-8141-536f600b0ab7.aspx

I have a couple questions about why I should buy from a reseller.  Mr. Schinkel says in his blog post that I should purchase from him because he will provide me with a comparison of the various products.  While I do agree this is useful and perhaps a time saver it is of little or no benefit to me because "all products are the same."  If there are two .NET components with the same function from well known component companies I don't even think about the quality of the component itself I just know the general quality of the companies products and place my order.

Mr. Schinkel also states that he will lower his prices (eventually) thus passing on savings to me.  How much will you actually save me?  With discounts even from buying direct I doubt he can save me a lot of money.

What about support?  Resellers don't provide support (and neither do the component vendors.)

Resellers are just middle men adding little to no value in the software industry.  Sure in other industries you need middle men.  You need warehouses to store inventory but you don't need warehouses to distribute software.  It seems to me that there is no need for component resellers in the software industry.

I bought the Watcom C compiler X number of years ago from Programmers Paradise.  They continue to send me catalogs.  I don't buy from them anymore.  There's simply no reason to.  (You can quit sending me the catalogs PP.)

db
Monday, June 21, 2004

Stop it.  Your going to ruin the Windows "cult"ure.

infidel
Monday, June 21, 2004


Just to clarify:  In my blog post, I wasn't really commenting on whether people should use resellers or not.  I was merely saying that from the perspective of a vendor who works with multiple resellers, a reseller with a weblog is more appealing than one without.

However, despite the fact that Schinkel's weblog draws my respect, his argument for using resellers didn't strike me as incredibly compelling.

Resellers typically account for about 10-15 percent of SourceGear sales.  International customers tend to use resellers more than those here in the states.  Also, some big corporate customers are required to use a reseller, for reasons I have never understood.

Eric Sink
Monday, June 21, 2004

Trust but verify.  If some comoponant reseller is doing leg work that you should do for you take advantage of it, just make sure you are getting the true poop from time to time.

Mike
Monday, June 21, 2004

Eric, your "The Law of Candor" does work for you.

It's far easier to believe your word in "The Future of SourceGear Vault" than in one your previous blogs. :)

Green Pajamas
Monday, June 21, 2004

Software companies need resellers in order to expand their sales channel.

If they are a good software company they will be faithful and not poach sales from resellers.  If they are a really good (for the channel) software company, they will flip leads and sales to their channel partners.

It can benefit the consumer because the reseller usually has a 30% margin on software that he can use to cut you a deal.  The manufacturer can't really do this as easily. 

Other than that, reseller channels are made for the benefit of the software company.  They need feet on the street out there selling their product.  If they want others to continue to sell their stuff, they have to make these resellers happy and able to earn a living.

Quintus
Monday, June 21, 2004

db:

The post Eric Sink referenced wasn't one I wrote to argue why developers should buy from a reseller.  The post I wrote to argue why developers should buy from a reseller is here: http://blogs.xtras.net/mikes/PermaLink,guid,fd4dd0b8-2b6d-48aa-875c-1875d7a7e7cc.aspx  And that one is now dated and due for an update because there are even better reasons now.


The post on which Eric commented I actually wrote to be background for planned future posts about detailed specific benefits of buying from Xtras.Net [ www.xtras.net ].  I didn't expect many people would actually read it except possibly when linked from my later posts, and I definitely didn't think anyone of Eric's stature would reference it, though am I flattered by his kind comments.

BTW, you wrote "Mr. Schinkel also states that he will lower his prices (eventually) thus passing on savings to me."  You misread the meaning of my statement, reprinted here: "I also plan initiatives that will lower the

average price of .NET components..."

My statement did not mean I would eventually offer you part of the discount I receive when buying from vendors

at a reseller discount.  Xtras.Net already does that, significantly.  Our prices are always lower than buying direct (as probably are PP's prices and every other volume reseller out there.) 

Instead what I meant was our planned initiatives would have the effect of driving the average price of components down by 10%, 20%, maybe even up to 90%.  For example, if the average price of a component today is US$500, our initiatives might bring the average component price down by US$50, US$100, maybe even up for US$450. 

That is a big difference from what you evidently understood, correct?

While I'm sure most developers would love to see these changes, I am concerned some vendors will fear those changes or even be angry at me for mentioning them. However, if they are reading this I want them to know the iniatives we plan are not ones that would just lower the price of components by an order of magnitude but also ones that would increase the sales volume of components by two, three, or even four magnitudes. 

Compare selling 10,000 components at an average of US$500 each with selling one million components for $50 each. (I'll do the math: US$500,000 vs. US$50,000,000.) If you are a software vendor, which would you rather have?  And if you are a developer, wouldn't you prefer your US$500 buy you 10 components instead of just one?

In summary, my post was not about why a developer should buy from a reseller; that was an earlier post that needs revision.  Instead the post Eric referenced was a *blantant* and *obvious* plea for developers to buy from Xtras.Net, or for them to get their purchasing agents to buy from Xtras.Net so we can be empowered to drive down the average price of software components. (Please note I think the process I reference will take between 2 to 5 years for full effect.)

db, I would be honored to hear your reply or anyone else's thoughts regarding my comments here.

-Mike Schinkel
President; Xtras.Net
www.xtras.net
mailto:mikes@xtras.net

Mike Schinkel
Thursday, June 24, 2004

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