Last month I wrote about the 10 Commandments of Channel Management. This month I’m taking my surname-inspired biblical inspiration a step further to talk about something even more fundamental – Partner Profitability.
And when I say profitability, I don’t just mean product margin. I mean the whole financial model… the profit from product sales, services, recurring revenue, and third-party products, etc, less the costs (capital investments, ongoing expenses, lost time, lost productivity, lost customer satisfaction, and the other “hidden extras” that so often eat away at the bottom line). So here are my 10 Commandments for Partner Profitability.
1. Thou shalt have no other gods before me
(Thou shalt have no vanity metrics before partner profit)
Vendors love big revenue numbers. They look great on slides, they impress boards, and they fuel press releases. But for partners, revenue is a vanity metric. What matters is what they keep, not what they sell. A vendor boasting about “$10m through the channel” means little if the partner’s net is 2% after rebates, certification costs, marketing spend, and discounting pressure. Partners don’t survive on top-line numbers – they survive on EBITDA.
Vendor takeaway: build partner profitability into the KPIs of your program decisions, not an afterthought.
2. Thou shalt not make unto thee any graven image
(Thou shalt not make flashy dashboards that don’t reflect profitability)
Too often vendors proudly show partners dashboards filled with colourful graphs of pipeline, leads, or certifications. The problem is that partners don’t pay staff salaries with pie charts. Their P&L is driven by margins, attach rates, services revenue, cash flow, retention, churn, utilisation, SLA attainment… the boring stuff that actually keeps the lights on.
Vendor takeaway: align your partner scorecard to these real-world KPIs, not vanity metrics designed to look good in an internal exec pack.
3. Thou shalt not take the name of the Lord thy God in vain
(Thou shalt not take the promise of margin in vain)
Saying to a partner “you can make 30%” is meaningless if rebates are unattainable, discounts are clawed back in price wars, or your channel is so overcrowded that they’re undercutting each other to scratch out a living. Even worse is when poorly managed vendor sales teams encourage partners to slash their prices just to get the deal across the line. That’s not partnership – that’s exploitation. Trust disappears quickly when promises don’t match reality.
Vendor takeaway: replace vague “up to” claims with real worked examples showing what a partner can expect at street price, with rebates, services attach and achievable gross margin.
4. Remember the sabbath day, to keep it holy
(Remember the partner’s business model, to keep it unsustainable)
Not all partners look the same. A VAR lives on project services, an MSP survives on annuity revenue, and a distributor thrives on volume. Some partners chase topline growth, while others care more about margin. Some want new logos, while others want to broaden their stack with existing clients. The problem comes when vendors roll out “one-size-fits-all” incentives. What motivates one group alienates another.
Vendor takeaway: understand the different routes to profit and align your programs accordingly.
5. Honour thy father and thy mother
(Honour thy partner’s investments in people and tools)
Partners spend real money building capability – hiring certified engineers, training sales staff, investing in pre-sales, and standing up tools to support your product. Nothing kills goodwill faster than seeing a vendor spin up its own internal services group and start competing with the very partners who made the investment. If you want partners to build capacity around you, then enable them (possible using your own services team), don’t undercut them.
Vendor takeaway: reward and recognise partner investment – especially certified staff – in your tiers and incentives.
6. Thou shalt not kill
(Thou shalt not kill partner profitability)
Here’s where so many vendors underestimate the impact of their actions. A 2% discount may feel like nothing to a vendor if you’re measured on revenue. It’s just 2%. But for a partner working on (say) 12% margin, that 2% cut wipes out 17% of their profit. For a distributor operating at 8%, it’s a 25% hit. That’s the difference between a partner being profitable and a partner questioning why they’re still working with you.
Vendor takeaway: learn how your partners make money, and talk to them about the overall profit model, not just margin.
7. Thou shalt not commit adultery
(Thou shalt not flirt with direct sales at the expense of thy partners)
As I’ve written in previous articles, there’s nothing wrong with vendors running a hybrid model, where direct and indirect coexist. The problem is when they compete. Even worse is when a partner brings you an opportunity, but somehow it makes its way to the direct sales team, or to or competitive partner. Having a clear delineation between direct/ indirect, as well as establishing clear rules of engagement (and the consequences of breaching those rules) is critical to achieving successful hybrid model.
Vendor takeaway: have clear rules of engagement, enforce them consistently, and resolve conflicts quickly.
8. Thou shalt not steal
(Thou shalt not steal customer intimacy from thy partners)
Partners spend years nurturing trust with their customers. And their business with those customers, which includes other products and services, most likely eclipses the business you may have with them. For example, according to Canalys, full service AWS partners can achieve a $6.40 multiplier per $1 AWS sold. So when vendors bypass them – whether through marketplaces, vendor websites, telemetry data, or direct sales pitches – you’re not just stealing revenue, you’re stealing relationships, and possibly their future income stream. And partners have very long memories when it comes to vendors who impact their relationships, because it’s the most valuable equity a partner has.
Vendor takeaway: respect customer ownership and find ways to engage jointly, not to disintermediate.
9. Thou shalt not bear false witness against thy neighbour
(Thou shalt not proclaim channel success whilst partners quietly bleed)
Here’s an uncomfortable truth that occurs more often than it should: vendors often celebrate record bookings and bold headlines while partners are struggling to stay profitable. According to Service Leadership’s Q1 2025 data, best-in-class MSPs are achieving around 19% adjusted EBITDA, but the median sits closer to 10%. And many partners fall well below that. It’s not enough to count deal registrations or certifications. The real test of channel health is whether partners’ bottom lines are growing alongside yours. If they’re busier but poorer, your “success” is hollow.
Vendor takeaway: benchmark your partners’ profitability against industry data, and include it in QBRs
10. Thou shalt not covet
(Thou shalt not covet short-term revenue at the cost of long-term profit)
Quarterly revenue targets may be the vendor’s reality, but most partners run their businesses for the long haul. If you push them into short-term behaviours – discounting heavily, bundling away services, or taking shortcuts just to hit a quarterly number – you undermine their ability to build sustainable profitability. Datto’s 2025 survey shows 63% of MSPs prefer fewer vendors, and 46% plan to consolidate suppliers over the next 12 months to improve efficiency and margin. If you don’t align your strategy to improving partner profitability, you might just be one of the ones they replace.
Vendor takeaway: weight your programs and rewards toward recurring revenue and retention.
Closing Thoughts
Revenue turns heads in boardrooms, but profitability wins hearts in the channel. Partners don’t exist to push your products – they exist to run viable, profitable businesses. Vendors who protect margin, respect service economics, and reward long-term growth will earn loyalty that no last-minute discount can buy. After all, these aren’t commandments etched in stone – they’re lessons written in decades of channel experience. And if you ignore them… well, as another Moses might say, you do so at your peril.
If you’ve got any thoughts or comments, I’d love to hear them. You can contact me here.
