Reseller Agreement

reseller agreement refers to a legally binding contract between a product manufacturer or service provider and an external party, granting the party the right to sell or distribute the product or service, often within a specific territory or market.

Example: A software development company creates a cutting-edge inventory management system. It enters into a reseller agreement with a business consultancy firm that specializes in retail solutions. This firm now has the permission to offer and sell the inventory management system to its retail clients, often adding its own markup. In this way, the software company expands its market reach without directly engaging in retail client management, and the consultancy firm enriches its product offering, providing more value to its customers.

• Expands market reach and access without increasing direct sales force
• Enables leverage of the reseller's existing customer relationships and market knowledge
• Allows for scaling of business operations with relatively lower marketing and sales expenses

Understanding reseller agreement helps businesses effectively scale their distribution channels, increase revenue without proportionally increasing the sales and marketing costs, and tap into new markets and customer segments through the strategic partnerships.