There are two scenarios for a Company with Technology to sell to biz customers have to choose from...
1. A Company can develop a marketing plan, hire sales staff, and build sales by Direct solicitation to Customers over a long period of time, organically, or
2. Immediately Sell through Companies who already have business relations with your ultimate customer.
The First requires capital to fund and train sales force and time to execute...rollout over long period of time...but you have a percentage cost and therefore Margin Costs.
With the Second, you pay your partner who has immediate access to use their resources and sales to deal with your Ultimate customer base who they are already and currently dealing with. You pay them (what it would have cost you in Margin costs in First scenario, and perhaps a little more...but you access huge market and immediate sales opportunity. What you lose in Margins with your partner...you more than make up with Volume and Time.
The bottom line...is the Bottom Line...how much you make total...not necessarily how high your margins are.
Which is better?
1. Selling 10,000 apps at $1 with 80% margins for gross profit of $8,000, or
2. Selling 1,000,000 apps at $1 with 50% margins for gross profit of
$500,000?
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