In today’s rapidly evolving digital terrain, businesses increasingly use cloud services to streamline operations, reduce costs, and enhance scalability. As a result, there’s an increasing worldwide demand for cloud services in various markets and verticals. With this context in mind, cloud services reseller agreements have become a standard tool for companies looking to resell cloud services to their customers, whether it’s software as a service (SaaS), infrastructure as a service (IaaS), or platform as a service (PaaS).

In this post, I explain what cloud services reseller agreements are, what companies use them for, the essence of these agreements, and some essential points to consider when drafting and negotiating them.

What are cloud services reseller agreements?

A cloud services reseller agreement captures the relationship between a cloud service provider (CSP) and a reseller. The reseller is a third-party entity that sells the CSP’s cloud services to the reseller’s own customers.

These agreements help facilitate the distribution of cloud services, enabling CSPs to expand their customer base and reach while allowing resellers to offer comprehensive solutions to their clients without developing their own cloud infrastructure.

What are they used for?

Cloud services reseller agreements serve several crucial purposes:

  1. Distribution of services: They define the terms and conditions under which a reseller can market, sell, and support the CSP’s cloud services.
  2. Pricing and commissions: They specify the pricing structure, discounts, and commission rates for the reseller, ensuring transparency and fairness.
  3. Rights and obligations: They outline the rights and obligations of both parties, including support, maintenance, and service level agreements (SLAs).
  4. Intellectual property: They clarify ownership and usage rights of intellectual property, such as trademarks, in marketing materials and products.
  5. Termination: They provide terms for termination, including reasons for termination and the transition of customers.

The essence of this agreement

The essence of a cloud services reseller agreement is the following clause:

The CSP grants the reseller the right to sell cloud service subscriptions to their end customers, allowing access and use of the cloud services. However, the CSP will only grant access and use to end customers who agree to its standard terms of use. The CSP retains ownership of the cloud service, including hardware and software, and this agreement does not give the reseller any rights to the cloud service, including distributing, reproducing, or modifying it.

Drafting and negotiating cloud services reseller agreements

When drafting and negotiating cloud services reseller agreements, consider the following tips:

  1. Customisation: Tailor the agreement to fit both parties’ unique needs and goals.
  2. Clear definitions: Ensure that all terms are clearly defined to prevent misunderstandings.
  3. Pricing flexibility: Allow for pricing adjustments based on changing market conditions or customer demands.
  4. Exit strategy: Include a well-defined exit strategy to address the transition of customers and data in case of termination.
  5. Compliance: Ensure the agreement complies with all applicable laws and regulations, such as data privacy and cybersecurity requirements.
  6. Flexibility for growth: Build provisions that accommodate the potential growth of the reseller’s customer base.
  7. Legal review: Seek legal counsel to review and negotiate the agreement to protect your interests and reduce risks.

Need help?

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