Getting into affiliate or reselling can look easy at first.
It feels like a quick way to earn: promote a product, sell it, and make money. But most people don’t stop to understand what these models actually involve. That’s where things go wrong.
At the same time, starting an agency sounds more serious and complex. But it’s not always the uphill battle it seems.
The truth is, each model works very differently.
In this guide, we’ll break down software reseller vs affiliate vs agency so you can clearly see what each one means, and which one is right for you.
What is a Software Reseller? Understanding The Basics
Software reselling is a business model where you buy or partner with a software provider and sell their product to customers under your own terms.
Instead of building software from scratch, you act as the middle layer between the provider and the end user.
A prominent example of this is Microsoft’s partner network, where thousands of businesses resell Microsoft 365 and Azure services to their own clients.
How a Typical Reseller Model Works
A reseller model generally involves the following steps, from onboarding to ongoing delivery:
In short, you focus on selling and relationships; the provider handles everything happening under the hood.
How Resellers Make Money
Now comes the most important question: How does a reselling business actually make you money?
We’ve broken down 4 common ways for ease of understanding:
- Buying at wholesale pricing (lower bulk cost) and selling at a markup (higher retail price)
- Earning recurring commissions on subscriptions
- Offering setup, customization, or support services
- Bundling software with other solutions
On the whole, the reselling path is a solid low-risk entry into building a sustainable, margin-driven business.
Platforms like BotPenguin make this model even more accessible by offering chatbot solutions that can be resold to businesses without heavy technical setup.
With ready-to-use automation, multi-channel support, and flexible pricing, it becomes easier to focus on acquiring clients while the platform handles the underlying technology.
Let’s now dive into what an affiliate business actually looks like in practice.
What are Affiliates in Software and How Do They Work?
An affiliate is someone who promotes a company’s software and earns a commission for every sale or action they drive.
So you get paid for sending the right people through the door. Nothing more, nothing less.
Example: If you promote a chatbot platform like BotPenguin through your YouTube channel and someone signs up using your link, you earn a 20% recurring commission on each sale.
The typical process for software affiliate programs looks like this:
- Join a SaaS affiliate program.
- Share your tracked link through content or campaigns.
- Users sign up or subscribe via your link.
- The system attributes the conversion to you.
- You earn a commission on each successful signup or sale.
How Software Affiliates Make Money
Affiliates usually earn through commissions, which can be one-time or recurring depending on the SaaS product.
Some programs also offer bonuses for high-volume referrals.
And although affiliate marketing is a simple way to monetize software, it comes with limited control over pricing, customers, and long-term revenue.
What is an Agency in Software and How It Works
An agency in software does not sell the product directly. Instead, it uses software to deliver services to clients.
Think of it this way → The software is the tool. The agency is the one doing the work.
For instance, an agency might use a chatbot platform, CRM, or automation tool to help businesses generate leads, manage conversations, or improve operations.
How Agencies Deliver Services Using Software
Agencies combine software with execution. They do not just recommend tools. They set them up, manage them, and optimize them.
Typical services include:
- Setting up and configuring software for clients.
- Building workflows, automations, or campaigns.
- Managing day-to-day operations on the platform.
- Optimizing performance based on results.
- Providing ongoing support and strategy.
In most cases, the client never interacts deeply with the software. The agency handles everything.
How Agencies Make Money
Agencies earn by charging for their time, expertise, and results.
Common revenue models include:
- One-time setup or onboarding fees
- Monthly retainers for ongoing management
- Project-based pricing for specific deliverables
- Performance-based pricing in some cases
Unlike affiliates or resellers, agencies are not limited to commissions or margins. Their earning potential depends on the value they deliver.
Reseller vs Affiliate vs Agency Comparison: A Comprehensive Overview for Software Businesses
While the three models may seem similar at a glance, the differences show up in ownership, effort, and long-term potential.
Understanding these distinctions clearly will help you avoid costly mistakes and pick a model that actually aligns with your goals.
If you’re evaluating reseller vs affiliate programs, or comparing the agency vs reseller model, this breakdown will give you a clear, side-by-side view.
Key Points to Remember
- Affiliates focus on traffic and conversions, not ownership.
- Resellers combine sales with customer relationships and recurring revenue.
- Agencies deliver outcomes, not just tools, which increases revenue per client.
- Control increases from affiliate → reseller → agency.
- Effort, responsibility, and complexity increase in the same direction.
With these three prominent models, there’s another player worth understanding, viz., referral marketing, that often gets confused with affiliate marketing but works very differently.
The next section will break down how referral marketing differs from affiliate marketing and where each fits.
Affiliate Marketing vs Referral Marketing in Software: Why They Are Not the Same Thing
Marketers often use affiliate and referral as if they were the same. But they're not the same thing.
One taps into the power of strangers with audiences, the other leverages the trust of people who already love your product.
The table below shows the difference between referral and affiliate marketing:
Affiliate programs are built for reach; you’re essentially paying for introductions at scale. Referral programs, on the other hand, are built on earned trust. A friend recommending a tool carries ten times the weight of a banner ad.
Key Insight: So in a comparison between affiliate program vs referral program, always remember: Affiliates grow your top of the funnel. Referrals grow your trust circle.
Top Pros and Cons of Software Reseller, Affiliate, and Agency Models
Each business model comes with clear advantages and trade-offs. Understanding both sides helps you choose what fits your goals and resources.
Let's first look at how reseller models stack up:
Evaluating the Reseller Model
Pros:
- Recurring revenue through subscription margins
- Full ownership of the customer relationship
- Ability to bundle and upsell additional services
- Higher earning potential per client compared to affiliates
Cons:
- Requires active sales and onboarding effort
- Customer support falls on your shoulders.
- Dependent on the provider’s product quality and uptime
The reseller model works best when you want predictable recurring revenue with direct customer relationships. Now let’s look at how the other two models compare.
Breaking Down the Affiliate Model
Pros:
- Low barrier to entry; no product or support needed
- Highly scalable with content or paid traffic
- Passive income potential once the content ranks or converts
- Zero operational overhead
Cons:
- No customer ownership or relationship
- Commission rates can change without notice.
- Income is inconsistent, especially early on.
Affiliating reflects a high-volume, low-touch approach to earning, best suited for those with an existing audience.
The Agency Model: Pros and Cons
Pros:
- Highest revenue per client
- Full control over pricing, branding, and delivery
- Strong long-term client relationships
- Positioned as a trusted expert, not just a vendor
Cons:
- High effort; delivery, execution, and client management
- Harder to scale without a skilled team
- Revenue tied to active work, not passive systems
Much like the other two, the agency model is not for everyone. It specifically appeals to those with the right skills and appetite for client work.
At the same time, it remains the highest-ceiling, highest-effort path of the three.
Which Business Model Should You Choose for Your SaaS Business?
Selecting the right model comes down to an honest evaluation of your capabilities, goals, and bandwidth.
Here's a clear breakdown for informed, confident decision-making:
The Bottom Line: The right model isn't the most lucrative one; it's the one most aligned with your resources and long-term goals.
If you’re already exploring reseller or affiliate paths, BotPenguin’s partner program offers flexible ways to get started without a heavy upfront investment. You can either resell chatbot solutions to your clients and build recurring revenue, or promote the platform as an affiliate and earn commissions through your audience.
Common Mistakes To Avoid When Choosing Between Reseller, Affiliate, and Agency Models
Picking the wrong business model can cost you months of effort and revenue.
Here are the most common mistakes to avoid before you commit:
Choice Based on Ease Instead of Long-Term Goals
Many people choose affiliate or reselling simply because it looks easier to start. This often leads to low returns or misaligned expectations over time.
The Right Approach: Choose a model based on your long-term goals, not just how easy it is to begin.
Ignoring Customer Ownership and Control
Overlooking who owns the customer relationship can limit your ability to build a sustainable business.
Affiliates, for example, don’t retain customer control. Similarly, agencies own their client relationships entirely, but that also means full accountability for delivery, outcomes, and retention.
The Right Approach: Prioritize models that align with how much ownership and control you want over customers and revenue.
Underestimating the Effort Required for Agencies
Agencies are often seen as high-reward, but they demand consistent delivery, client management, and operational effort. Many underestimate this commitment.
The Right Approach: Be realistic about the time, skills, and systems required to run an agency successfully.
Expecting Passive Income from the Wrong Model
Not all models offer passive income. Agencies and resellers often require active involvement, especially in the early stages.
If you’re expecting to set things up once and watch the revenue roll in, the affiliate model is your only realistic starting point, and even that requires upfront content or traffic investment.
The Right Approach: Match your expectations with the nature of the model; choose an affiliate if passive income is your priority.
Not Aligning the Model With Your Skills and Resources
Choosing a model without considering your strengths, experience, or available resources often leads to slow progress or failure.
The Right Approach: Select a model that fits your existing skills or one you’re ready to invest time in developing.
The path you choose is only as good as the clarity you bring to the decision. Avoid these mistakes early, and you'll save yourself significant time, money, and frustration down the road.
Summing Up
Choosing between reseller, affiliate, and agency models comes down to what you want to build. Each model works. But they work differently.
Affiliates are simple and low effort. Resellers offer more control and recurring revenue. Agencies bring the highest earning potential, but require the most work.
There’s no single best option. The right choice depends on your goals, skills, and how involved you want to be.
Take a step back. Think long term. Then pick a model you can commit to and scale over time.
Frequently Asked Questions (FAQs)
What is the difference between a reseller, affiliate, and agency?
A reseller sells software directly, an affiliate promotes and earns commissions, and an agency uses software to deliver services and charge clients for outcomes.
Which is better: reseller, affiliate, or agency?
It depends on your goals. Affiliates suit beginners, resellers offer recurring revenue, and agencies generate higher income but require more effort and client management.
Can you do both affiliate and reseller at the same time?
Yes, many businesses start as affiliates to generate leads and later transition into reselling for better margins, control, and long-term customer relationships.
Do affiliates own the customers they refer?
No, affiliates do not own customers. The software company retains ownership, limiting long-term revenue opportunities and direct relationship building with users.
Is an agency model more profitable than reselling or affiliate marketing?
Agencies can be more profitable per client due to service fees and retainers, but they require higher effort, expertise, and ongoing delivery compared to affiliates or resellers.
What is the difference between affiliate and referral marketing?
Affiliate marketing involves external promoters earning commissions, while referral marketing relies on existing customers recommending products, usually in exchange for rewards or incentives.
Which model is best for beginners in the SaaS business?
Affiliate marketing is best for beginners due to low entry barriers, minimal operational effort, and no need to manage customers, support, or product delivery.
