Know-How Exchange : Other

There are undoubtedly all sorts of agreements between manufacturers/marketers and distribution companies. You can probably create one to suit your needs.

What you need to do is make sure the arrangement will be attractive and motivating for your distribution partners. If they think you're making a lot of money and they aren't, you'll soon find them ignoring you and spending their time on other manufacturers' products.

As for commissions, most of the time it's a percentage of GROSS sales. You might offer a higher percentage for your higher margin products, but it should probably be tied to GROSS SALES rather than gross profit. Your distribution partners need to focus on selling volume, not on your margins.

There are experts on this forum who are really good at this kind of stuff. I'm pretty sure you'll get more (and better) answers from them.

Resellers, by definition, re-sell - so they buy the product and resell a a higher price. So they are making their money based on the difference in price between what they pay you and what their customer's pay them. What they are doing is not a commission, but a profit margin.

Manufacturer's reps or other agents that don't take ownership of the product, but are working to sell your products, would get a commission.

If someone is working on commission, it should be based on a percentage of the price they are selling it at. So if someone worked for your company setting up resellers and was paid a commission, it would be based on the dollars the reseller pays you (not the amount their customers pay the reseller). Same holds for the reps - they get a commission based on what you are paid, as they are working for you.

This actually makes things easier. if you tried to give a commission based on what the reseller was paid, you would have to track each sales to the final price so that the commission could be adjusted for discounts, etc., which is information the reseller wouldn't like to have to provide you.