Resellers in uproar over SaaS pricing

Two more advanced SaaS products due next quarter.

Kaseya's launch of its software-as-a-service (SaaS) model, announced on Monday in partnership with Ingram Micro, has sparked anger among some of the vendor's resellers.

Kaseya has denied accusations from some Kaseya resellers that the low pricing of its SaaS service - $9.95 for an account and $1.50 per seat per month - has undercut the cost of bulk licences sold directly by the vendor.

At the heart of the debate is a difference over how Kaseya's licences are used. Kaseya intends for its licences to be sold in only one way - to provide a full managed service to an end customer.

However, largely as a consequence of the vendor's insistence on selling large blocks of licences for tens of thousands of dollars, Australian resellers have devised various methods - some unauthorised - to draw extra revenue from unused or underused licences.

These methods and the business models they supported were now threatened by the low-cost SaaS service.

Dan Shapero, Kaseya's senior vice president of business development and channel marketing, SaaS, said there was a "misunderstanding" by some partners who were comparing prices of two different products.

The SaaS service, sold as IT Toolkit, was limited to remote control and troubleshooting.

"There's no automation, there's no backup, there's no anti-virus. It's a fairly finite set of IT services," said Shapero.

By comparison the Master IT Service Edition (MITSE) licence gave resellers access to the entire Kaseya platform, said Shapero.

"That's everything from patch management and help desk, ticketing, full scripting engine with backup and endpoint security, monitoring - remote control is just one of the features," said Shapero.

He added that resellers who bought licences owned them outright, whereas resellers of the SaaS product would need to keep paying for the licences every month they used them.

Kaseya partners also pay an annual maintenance fee for MITSE licences equivalent to 20 percent of their purchased value.

However, some resellers who had been selling Kaseya as a tiered range of services, from basic remote control through to a full managed service, believed the vendor had "devalued" their licences.

"If you purchase a 500-seat licence it costs you $67,000, which means you have to resell at $14 per seat to make a profit," Darren Davis, director of the Consortium Group, told CRN. "But you can now go to Ingram and buy it per seat - something we're not allowed to do - for $1.50."

Davis said he had paid $12,000 for his first block of licences two and a half years ago, spent another $12,000 a year later on a second block and bought his third in August for $23,000.

"But to now say you can get the product for $1.50 is a welcome smack in the face," said Davis.

Paul MacNeill of Pro Integrations said he also offered the licence as a basic or premium service to his customers.

"If I deploy an endpoint from my (MITSE) licence pool to that person, there's no discretion to the type of licence that you deploy. I paid $130,000 for 1250 seats. If I sell them out at $1.50 immediately I'm using a very expensive licence in a low value way."

Next page: Licence resale market under pressure