Software Reseller Profit Margins

[mercury529]

Not sure if this is the best place to ask, but I figure there is probably someone here who might know.

I was just curious if anyone knew what typical software reseller profit margins were. Does anyone know what is an average percentage on software? What is considered a good percentage? Does it vary by software type?

Thanks for any info you can give. If you can provide how you know too, that would be even better yet.

[frostbitetwice]

Mercury, I Google this and found a range of 36%, Checkpoint, down to Linux 5%. The average was 14% and Mr Sofftie at 28%. The more exclusive the product the great the price, the great the margins.

[mercury529]

Thanks a lot frostbite. I have had a very hard time trying to find out what is a reasonable profit margin for software vendors. In particular, I have been trying to locate info on the profit margin for security products. Your information helps out a lot, and thank you for providing how you acquired it as well.

Thanks again for this, and any more info any of you can share.

[frostbitetwice]

Thanks you the nice words, Mercury. You may get even more answers from a trade group representing the industry. Hey, you might want to call a software company and ax them directly.

[mercury529]

I would contact vendors directly, except I have two problems. First, I do not know if any would actually disclose that information. Two, all the vendors I know are local area vendors and vendors that I'd like to sell my product. If I ask them, they may inflate the figure so I give them a larger percentage.

[frostbitetwice]

Mercury, have you developed your own software or are you looking to wholesale an existing product?

[mercury529]

I have developed my own product.

[frostbitetwice]

Mercury that is great. I wish you all the best and much success. My thoughts on this is that if the produce is geared to households vs commerical there maybe a large price difference. With the former one could do some price studies on web sites as Egg or others, however, if the product is for the latter and is very specialized software you are going to need expert helf in determining pricing. Once again I urge you to contact firms that sell this type of software. They will have price information for you.

[mercury529]

Thank you frostbite. I appreciate the words of encouragement. Rare to meet such a nicer person here.

My product is very specifically targeting enterprises at the moment. I have a very good idea of what my competitors charge for their products through their own websites and resellers. What I do not know is how much of a cut the vendor gets when they sell the product. So far, I have not been able to reach a vendor who would volunteer that information. Thank you very much for the suggestions.

[frostbitetwice]

Mercury, you are too kind. I believe many gross markup are as high as 100% or more depending how much competition is out in the market place. If I were you, Merc, I would enter the market with a lower price and better margins for my resellers. In fact, I would tell my buyers that this is special pricing and I would strive to build my unit sales. After all, from a user perspective, if the software improves productive and saves time they would be willing to pay more. Over....