Pricing for most PRM systems is tied in some way to the number of partners in your program. Some platforms charge for every partner organization with a valid ID, some charge for every user with a valid ID, some charge a flat fee for your entire community whether or not they use the system. Some platforms charge based on logins per month, or average active partners or users over a period of several months. In most cases, you should be willing to pay for the scale of your partner community that will be using the PRM, and want to avoid charges based on individual ID’s or minimally active partners. There are different types of partner pricing models, so it’s important to understand the usage pattern you expect for your community and be clear about how it relates to your potential vendors’ models so you can determine if their pricing scheme aligns with your needs.
A consideration when evaluating licensing models is your budgeting and procurement process. Platforms that are licensed based on usage will have a variable cost associated with them. That cost may vary by month or by some other time frame. If your procurement or budgeting process is rigid, a variable cost may create a challenge. Set your pricing based on your active partners; when your engagement increases you can always move up. Discuss your situation with the PRM vendors you are considering. There is often an alternative structure available based on wide bands of usage where the price may not change frequently or ever. Expect to pay more for this approach because you are buying licenses for partners that may not exist or may not actually be engaged.
So… What does a PRM cost?
Within the PRM world, there’s a broad range of vendor choices. If you think in terms of T-shirt sizes, your needs could be small, medium, or large, and there is likely an appropriate solution to match. Factor in all of the considerations described above to help select the vendor type and scale of platform that is appropriate. There are excellent platforms for early-stage launching programs with a single currency and geography, for a limited number of partners. These systems for “small programs” are typically going to be priced in the range of $1,500 – $2,000 per month for a modest partner community.
As program size and complexity increases to medium and larger applications, the price range grows accordingly. Depending upon how partner or user ID’s are measured, you can anticipate $300 – $700 per partner per year. A program with ~200 partners will likely cost in the range of $30,000 – $60,000 annually. There are platforms for less that offer narrow support for large numbers of partners, and in some cases unlimited usage. The scope of these platforms is generally limited, but they may be totally appropriate for programs with many partners that are not very active or who make very limited contributions to your selling model. Referral programs where your team does all of the heavy-lifting come to mind.
On the upper end of program size and complexity, pricing becomes much more customized, and product features and adaptability become the key considerations. As programs become large, the number of inactive or dormant participants tends to increase, and the need for automation in the PRM tends to increase as well. Large programs also tend to require much more flexible integrations with existing systems, and have more demanding requirements for content management. A pure play solution may be appropriate if there is an existing infrastructure of enterprise systems that fill in the gaps such as marketing automation, training, and analytics and reporting. The guiding elements for evaluating price in these environments will be the costs associated with implementation and integration, and the level of support and investment needed across the enterprise. A rule of thumb is channel programs that have thousands of engaged participants will typically cost hundreds of thousands of dollars per year based upon the 80:20 rule of partner activity. Very large and sophisticated programs can expect licensing fees approaching $1M per year.
When comparing a pure play PRM solution with a more comprehensive platform, there are many factors that come into play. A favorite Zift analogy is office productivity software. Back in the day, we used to buy a spreadsheet for ~$400 and a word processor for about the same, and a graphics/slide program, and a mail client. Microsoft bundled it all together and called it MS Office and priced it at about the cost of one of the tools. Buying a bundle is always cheaper than buying component parts in almost every industry and product type. However, it isn’t always the right solution for every buyer. For example, in audio gear, aficionados prefer buying components while others are happy with just a smart speaker. You may already have elements of channel technology that are working for you, and you just need to replace a piece of the stack. You need to consider if the pure play new piece plus the cost of surgically inserting it into your stack (integration) plus the cost of the existing pieces, will result in an acceptable cost, and more importantly an ideal user experience, or would you be better off replacing some of your existing components to get an integrated solution out of the box. Be sure to consider all of the elements listed – cost of the existing components, cost of the new component, cost to integrate, ultimate user experience.
When comparing a comprehensive platform with a pure play PRM, pricing can be tricky. For a new program, a comprehensive solution can be a single decision that delivers a fast path to an all encompassing partner program in one box. Initially, you may be getting more than you need, so the starting costs might seem a bit higher. However, if you take a little longer view and truly map out the partner journey from recruitment to onboarding, enablement, demand generation, and ultimately to transacting, you will begin to build a technology roadmap with which you can compare ownership costs beyond the initial purchase. Unless you’re the stereo aficionado type, if you have nothing today, a comprehensive platform is a clean way to start.
As with everything we’ve covered, there’s no definitive answer to the question of cost without a deeper understanding of your platform needs. However, here is a general rule of thumb using our T-shirt metaphor: For a small program, the all-in-one platform is likely 20% – 40% more in license fees than a starter PRM. This translates into a small up-tick in cost per partner per year, but it can deliver a significant cost advantage in the future as your program grows and matures because you avoid having to replace or integrate new systems down the line.
For medium channel programs, the cost difference on a percentage basis is probably a bit smaller, and could offer significant savings when you consider the ability to turn off other systems or to avoid licensing them in the future. If you are in this “medium” size, you’re probably considering licensing a new platform because your program has plateaued and you want to grow, or your program has outgrown your existing technology stack. This is where selecting a comprehensive platform really shines. The breadth of capabilities to manage the entire funnel from lead generation to closed business is critical to increasing partner effectiveness. Larger programs also tend to have a variety of partner types, and a comprehensive platform is more capable of serving the entire partner community with a single administrative interface for maximum efficiency.
What if I just build it myself?
There’s always a tendency to consider “DIY” – or building a solution inside an existing enterprise CRM. This is particularly true for large programs and companies with significant IT resources. This approach can result in the exact system you want at a point in time with practically no compromises for vendor limitations. It is, however, unquestionably the most expensive alternative, usually by a factor of at least 5x – 10x. A major consideration, however, should be the requirement and commitment to continue to invest after the initial launch. The system may be exactly what you want on day 1, but the only way to keep a partner community engaged is to keep the system fresh, and no business process is going to remain static for long. A rule of thumb is to think about ongoing investment like a maintenance cost on the original cost of the build. You should consider allocating approximately 25% of the original cost to build the system as an annual technology maintenance. You want to ensure you have IT buy-in for future years, or you will find yourself stuck with a home-grown system that met the original needs, but not the current requirements.
If the system you build is within or on top of your CRM, you need to make sure you’re very clear about the licensing costs. If you start with a module from the CRM vendor, and then build your ideal system on top of it, the rule of thumb is that you will spend about $5 in implementation cost for every $1 of license cost. The bigger issue you want to understand is what you will have to pay in CRM licenses. Will you have license fees for each of your partners – or even worse, each of the partners’ users? As your program grows, this can rapidly spin out of control. If you avoid the fees by not putting your partners directly into your CRM, you may avoid the CRM licensing challenge, but with an added complexity in partner experience or system administration costs. If you enable partners to quote deals directly, be sure to consider if you will encounter licensing fees for the use of the CRM vendor’s CPQ tool (configure, price and quote), or if there are fees for partner usage of other modules. Chase all of the connections to other enterprise systems to get a complete picture of your ultimate licensing fees.
If you’re left with additional questions about PRMs, we recommend heading over to our Channel Learning Center. As with any effort, the better the management the greater your outcome will be. Do your homework to find the appropriate PRM for your consideration. As you continue your research to narrow down the field, our guides to costs and considerations can help you arrive at the best choice for your business.
