Many people assume you need to own a product to sell it. Not true.
What really matters is access, distribution, and the ability to deliver value to the end customer.
In fact, a large part of the software industry runs on this exact model. Companies build products, but others handle selling, onboarding, and support.
This is where software resellers come in. They act as the bridge between software vendors and customers.
In this guide, you’ll learn what a software reseller is, how the business model works, and how software resellers make money.
What is a Software Reseller? Understanding Who Sells Software and Why
A software reseller is a company or individual that buys software from a vendor and sells it to end users.
They don’t build the software. They distribute it, often with added expertise, services, or support.
What a Software Reseller Does
A reseller of software is like a middleware layer between the software product and the market. He manages the entire distribution chain, from acquiring licenses to delivering them to the right businesses.
Here's how the reseller ensures software reaches the end user without friction:
- Buys software licenses or subscriptions from vendors
- Sells those licenses to businesses or individuals
- Handles billing, onboarding, and account management
- Provides customer support on behalf of the vendor
- Bundles software with other tools or services
- Manages renewals and license upgrades
Where Does a Software Reseller Fit in the Software Ecosystem?
The diagram above shows exactly where a reseller sits: right between the vendor and the customer.
- The vendor builds and owns the software.
- The reseller handles distribution and the customer relationship.
- The customer gets the software, often with extra support baked in.
Looking to become a software reseller without starting from scratch? BotPenguin’s reseller program lets you sell AI chatbot solutions with tiered commissions going up to 100% of partner revenue share, so your earnings grow as your client base does.
How the Software Reseller Business Model Works
The software reseller model follows a simple flow. One party builds the product, another sells it, and the customer receives both the software and added support.
Flow: Vendor → Reseller → Customer → Ongoing support & revenue
This model works because it splits product creation and distribution, allowing each party to focus on what they do best.
As per Future Market Insights, the global software distribution market stands at $147.4 billion in 2026 and is projected to reach $536.2 billion by 2036, reflecting the growing prominence of software reselling.
How Software Resellers Make Money: Revenue Streams Explained
Software resellers don’t rely on a single income source. Most build revenue across multiple streams, making the model more stable and scalable over time.
We’ve explained these revenue streams for anyone looking to understand or enter the software reseller business:
License Markup
Resellers buy software licenses at a discounted rate and sell them at a higher price. The difference becomes their profit margin.
A prominent example is Microsoft's CSP program, where resellers purchase licenses at partner pricing and set their own retail price, keeping the margin on every seat they sell.
Vendor Commissions
Some vendors pay resellers a commission for every sale or referral. This is common in partner and affiliate-based reseller programs.
BotPenguin, for instance, offers tiered commissions ranging from 20% to 100%, helping resellers earn more as they close more deals.
Recurring Subscription Revenue
For software and SaaS products, resellers earn ongoing revenue from monthly or yearly subscriptions. This creates a steady, predictable income stream.
Service and Support Fees
Resellers charge for setup, customization, training, and ongoing support. These services often bring higher margins than the software itself.
Think: A reseller buys a CRM license at $50/user, resells it at $80/user, charges a $500 onboarding fee, and collects a monthly support retainer - all from a single client.
In simple terms, software reselling combines product margins with recurring income and services to build a scalable revenue model.
Types of Software Resellers: From Basic to Value-Added
After understanding how software resellers make money, it’s now time to look at the different reselling options available.
The table below helps narrow down which type fits your business model and how each approach generates revenue.
- The easiest to start: Direct and indirect resellers have the lowest barrier to entry. You don't need to build anything - just sell.
- The most profitable long-term: Value-added and white label resellers command higher margins because they own more of the customer relationship.
Thus, each type offers a different balance of control, effort, and profit potential, so the right choice depends on your goals and capabilities.
Software Reseller vs Value Added Reseller (VAR): How They Compare
Before we look at how a software reseller differs from a value-added reseller (VAR), we’ll first look at what the latter actually means.
Value Added Reseller: A Simple Definition
A value-added reseller (VAR) doesn’t just sell software - they extend it. They combine the core product with services like setup, customization, and support to solve real business needs.
Meaning: Instead of just handing a business a CRM license and walking away, a VAR sets it up, maps it to the client's sales process, trains the team, and stays on for support.
Key Differences in How a Software Reseller & VAR Operate
The table below depicts how a standard software reseller and a value-added reseller differ across the key dimensions that matter most, including role, revenue, and customer relationship.
When to Choose Each Model
- Pick the reseller model if you want a fast, low-risk entry into software sales.
- Pick the VAR model if you're ready to go deeper, with services, expertise, and longer client relationships that pay more over time.
Why Businesses Buy Through Software Resellers
As we discuss the varied aspects of software reselling, it's befitting to ask: why do businesses choose to buy through resellers instead of going straight to the source?
In practice, businesses don’t just buy software. They look for guidance, speed, and reliability. That’s why many prefer working with software resellers instead of going directly to vendors.
Here’s how you should look at it:
- Access to Expert Support: Resellers understand the product and its real-world use. They help with setup, troubleshooting, and ongoing support.
- Bundled Solutions and Services: Instead of just software, businesses get a complete package. This can include setup, integrations, and training in one place.
- Industry-specific Expertise: Many resellers specialize in certain industries. This helps businesses get solutions tailored to their workflows and challenges.
- Simplified Purchasing and Management: Resellers make buying easier. They handle licensing, renewals, and coordination, reducing complexity for the customer.
In simple terms, resellers reduce effort and add clarity, making software easier to adopt and manage.
Popular Types of Software Resold by Businesses
Software resellers work across multiple types of software, depending on demand, industry, and vendor partnerships.
This section breaks down the common reseller software categories resellers sell:
SaaS and Subscription Software
This is the most common category. Resellers sell cloud-based tools with monthly or yearly plans, earning recurring revenue from ongoing subscriptions.
Tools like Slack and HubSpot are widely resold through partner programs, each offering recurring commissions every time a subscription renews.
CRM, ERP, and Productivity Tools
Business software tools like CRM, ERP, and collaboration tools are widely resold. These are essential for daily operations, making them easier to sell and support.
Reselling CRM has become one of the most in-demand niches as businesses of every size now depend on customer management tools to track pipelines, automate follow-ups, and retain clients.
Cybersecurity and IT Software
Resellers often partner with vendors offering security tools, backup systems, and IT management software. These products require guidance, creating more service opportunities.
Industry-specific Software
Some resellers focus on niche solutions built for industries like healthcare, finance, or real estate. These tools solve specific problems, allowing resellers to position themselves as specialists.
In most cases, resellers choose software based on demand, ease of selling, and their ability to add value through support or services.
Who Should Become a Software Reseller? Key Profiles Explained
Software reselling isn’t limited to one type of business. If you already sell services, manage clients, or work in tech, adding software reselling is a natural next step.
Here’s who should consider this model:
The common thread across all four? An existing relationship with the end customer. Software reselling works best when trust is already there. You're simply adding more value to it.
The Real Benefits of Software Reselling
Software reselling is popular because it offers a simple way to start and scale without building a product. It fits well with service-based and client-focused businesses.
Here are the top advantages of choosing the software reselling business:
- Low Barrier to Entry: You don’t need to build software or invest in development. Most vendors offer partner programs, making it easy to get started quickly.
- Recurring Revenue Potential: Subscription-based software brings steady monthly or yearly income. This creates a predictable cash flow over time.
- Strong Client Relationships: Selling software keeps you involved beyond the initial sale. Ongoing support and renewals help build long-term relationships.
- Niche Specialization Opportunities: You can focus on specific industries or use cases. This helps you stand out and position yourself as an expert.
In simple terms, software reselling combines ease of entry with long-term growth and consistent revenue. It’s a model that rewards both distribution and long-term customer value.
If you're looking for a reseller program that checks all these boxes, BotPenguin offers a ready-to-sell AI chatbot platform with white-label options, recurring commissions, and full partner support, so you can start building revenue without building a product.
Exploring the Challenges of the Software Reseller Model
Software reselling is simple to start, but it comes with trade-offs. Understanding these challenges early helps you build a more stable and scalable business.
Vendor Dependency for Reselling
Resellers rely heavily on vendors for pricing, product updates, and policies. This limits control.
Solution: Work with multiple vendors and choose partners with transparent pricing and strong support.
Margin Pressure
Competition and vendor-set pricing can reduce profit margins over time.
Solution: Focus on value-added services like onboarding, customization, and support to increase overall revenue.
Licensing Complexity
Different vendors have different licensing models, which can be confusing to manage.
Solution: Standardize your offerings and work with vendors that have clear, flexible licensing structures.
Customer Support Responsibility
Customers often expect the reseller to handle issues, even if the problem is with the vendor.
Solution: Set clear expectations and build a support system that balances vendor escalation with your own service.
Irrespective of the business model, challenges exist at every stage of the software reseller journey. But with the right approach, they can be managed and even turned into advantages.
Software Reseller Models in the Real World: 3 Examples That Show How It Works
Theory only goes so far. Real-world examples make the model easier to understand and easier to apply to your own business.
*VAR Source: CDW Official
The pattern is clear: The more value a reseller adds, the deeper the client relationship and the higher the earning potential.
Is the Software Reseller Model Right for You?
Whether this model is right for you or not boils down to a few key factors you should consider.
These include your strengths, your business model, and how you deliver value to customers.
When This Model Makes Sense
This model works well if you already have access to customers and can influence their software decisions.
It's a strong fit for service-based businesses, consultants, and IT providers who can bundle software with what they already offer.
- You have an existing client base: Trust is already built, making software recommendations easier to act on.
- You offer services: Software slots naturally into what you already sell.
- You want recurring revenue: Subscriptions create predictable monthly income without building a product.
When to Consider Alternatives
You may want to explore other models if you don’t have an existing audience or sales channel.
It can also be limiting if you want full control over pricing, product direction, or margins. In such cases, building your own product or choosing a white-label model might be a better fit.
- You want full pricing control: Reseller margins are set by the vendor.
- You want to build a brand: White-label programs give you more ownership.
- You want product influence: Building your own SaaS gives you full control.
In the end, the right choice depends on how you create and deliver value, not just what you sell.
Wrapping Up
Software reselling is one of the easiest ways to get into the software space without building anything from scratch. You focus on selling, helping, and growing relationships.
But just reselling isn’t enough. What really matters is how you add value—through support, services, or the niche you choose.
If you already work with clients, this can grow fast. If you don’t, it will take time to build trust and demand.
At the end of the day, people don’t buy software. They buy solutions. The more clearly you solve their problems, the more this model works.
Frequently Asked Questions (FAQs)
What is a software reseller?
A software reseller sells software products from vendors to customers without building them. They earn through margins, commissions, subscriptions, and added services.
How do software resellers make money?
Software resellers make money through license markups, vendor commissions, recurring subscriptions, and service fees like setup, customization, and ongoing support.
Is software reselling profitable?
Yes, software reselling can be profitable with strong margins, recurring revenue, and added services. Profitability depends on niche focus, pricing, and customer retention.
Do software resellers need technical skills?
Not always. Basic product knowledge is enough to start, but technical skills help when offering services like integration, customization, or ongoing customer support.
What is the difference between a reseller and a value-added reseller?
A reseller sells software products, while a value-added reseller adds services like customization, integration, and support to deliver complete business solutions.
What types of software can be resold?
Common categories include SaaS tools, CRM and ERP systems, cybersecurity software, productivity tools, and industry-specific solutions tailored to specific business needs.
Who should become a software reseller?
Agencies, consultants, IT providers, and businesses with existing clients benefit most. They can easily add software reselling to their offerings and generate extra revenue.
