What are the economics that make partnerships feasible?

Think of revenue as a pie. One big slice is the manufacturer’s fully-burdened cost of manufacturing. They add the next slice, their profit and charge, to the distributor. The distributor then adds a slice for their profit and charges that to the channel partner, who then adds another slice for their profit and charges that to the customer. That’s a lot of slices. One of the burdens built into the manufacturer’s cost covers compensation for their direct salesforce. This can be re-directed as back-end rebates to channel partners or distributors creating the opportunity to have far more salespeople in the field selling their products.