If you ask a reseller how much they are making on your deal, you will usually get one of two answers. A vague range (“a few points of margin”). Or nothing at all. It is worth understanding why that answer is fuzzy, because the fuzziness is structural, not evasive.
Provider compensation to the channel comes in layers. Each layer has a different trigger and a different size.
The first layer is base margin. The provider sells the technology to the reseller at a discount off list price, and the reseller resells it to you at a price they determine. The spread is their base margin. This is the most legible layer. It is also usually the smallest.
The second layer is tier discounts. Most providers run a partner program with tiers (often named Gold, Silver, Bronze, or Platinum, Gold, Silver). The tier determines the size of the discount the reseller gets off list price. The bigger the reseller and the more business they do with the provider, the deeper the discount. Tier discounts can dwarf base margins. A reseller at the top tier may buy the same product for fifteen or twenty points less than a reseller at the bottom tier.
The third layer is deal registration bonuses. When a reseller identifies a specific opportunity and registers it with the provider, the provider grants that reseller an additional protected discount on top of their tier discount. This is meant to reward “demand generation.” The bonus is often substantial, and it is deal-specific.
The fourth layer is MDF and SPIFs. Market Development Funds are provider money paid to the reseller to offset marketing or co-selling expenses. SPIFs are bonus payments, often to individual salespeople at the reseller, for hitting specific targets on specific products. Neither layer is tied to anything you see on your quote.
The fifth layer is rebates. At the end of a quarter or year, providers often pay resellers back a percentage of total volume sold. The buyer’s contract does not reflect it. The buyer just knows the reseller pushed hard to close by a certain date.
Stack these layers together and you get the reseller’s total compensation on your deal. The reseller rarely sees a single number for this either. Different layers come from different departments at the provider, on different schedules, with different rules. What you see on your contract is a line item for the technology. What is embedded in that line item is all of the above.