Pitching Partnership Multipliers

Pitching partner opportunities is a game of 🎯multipliers, a concept popularized by Jay McBain. This approach offers a powerful, simple yet nuanced way to highlight potential partner gains. Let's look at how tech giant Red Hat pitches their partners.

OpenShift is a cloud Platform as a Service (PaaS) offering that helps developers create and manage multi-cloud applications using Kubernetes containerization technology.

💵 Here is how their partner margins stack up on resell, deployment and services revenues

1️⃣ Resell:

For every $100 of Red Hat software, partners who simply resell get an 11% margin. A low-risk effort with modest returns. Yet, it's a start.

2️⃣ Deployment Projects:

This involves helping customers to modernize their tech stack and apps. In case with global system integrators such projects can scale to millions $.

The reward? Deployment revenue is 140% of subscription revenue and brings higher 35% margins.

3️⃣ Managed Services:

After initial deployment many customers return to get help running and optimizing the solutions.

Here Partner Attach Rate becomes important - the likelihood that a customer will purchase a particular service/solution.

The partner attach rate with services average 35-60%, but the potential margins on these services are high at 60%.

4️⃣ Building a SaaS Product:

A less common but highly lucrative opportunity. Partners that build their own SaaS on top of OpenShift platform can get 75% margins.

To make the partner pitch compelling, yet realistic, Redshift shows a few multipliers

🏆 Total Revenue Multiplier - maximum possible revenue assuming 100% attach rate across all services. When companies from AWS to Microsoft to Salesforce pitch to their partners 6-10X multipliers - this is the multiplier you hear most often.

Blended Gross Margin stands at 39% for OpenShift and it's a great way to show partners how much money they can earn on average. The blended nature boosts the number with high margin services/SaaS in the mix.

Now, you might think that using a multiplier is exclusive to top cloud providers, but it shouldn’t be. Many, if not all, companies should leverage it to pitch partner opportunities.

Have you tried it yet?

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