Would a U.S. partner earn more with your offer?

Find out what the partner would have to stop doing

An established distributor or service company already has products, customers and work for its managers. Your offer competes for their selling time, technical staff, stock space and cash. Ask which of those resources are genuinely spare and which would be taken from another job.

The UK government’s export lesson warns that agents may have competing demands from other suppliers and that distributors may expect discounts and credit terms. That is a reason to examine the candidate’s actual workload and terms. It does not tell you what margin a U.S. partner needs.

Sources: UK government — business.gov.uk: When to use an agent; when to use a distributor; demands on resources, discounts and credit terms

Compare the same month, after the same kinds of cost

Fictional example, all amounts in U.S. dollars per month: a service partner is considering your equipment line. The direct-cost figure includes materials and variable delivery labour. The additional local-cost figure covers the management, selling and technical cover required for this offer. These are chosen assumptions, not typical industry costs.

Here, contribution means billings less the costs shown in the table. The alternative uses the same limited team capacity, and its US$13,000 is after the corresponding direct and additional local costs. Common overhead, tax, finance costs, opening expenditure and working capital have not been established for either option.

A fee that helps you can still leave the partner worse off

In this example the parent receives US$3,000. Assume its continuing support costs US$1,800 a month: it has US$1,200 left before other parent costs and tax. The U.S. partner, however, is US$1,500 behind its stated alternative. Neither amount is a net-profit forecast.

Reducing the fee to US$1,500 would leave the partner the same US$13,000 contribution as its alternative. But that fee would not cover the parent’s assumed US$1,800 support cost. No fee can both match that alternative and cover the support cost in this model. This is an arithmetic constraint in the example, not a legal royalty limit.

Test a specific improvement: a price customers will actually pay, lower delivery cost, less support work, or genuinely spare capacity. Record the evidence needed for the change. If the figures still do not work, narrow the offer or postpone it rather than assuming more volume will solve the problem.

Give the partner a reason it can show to a customer

Replace “our technology is unique” with a testable job it does better. That might be a repair the current supplier cannot complete, a documented reduction in a customer’s stoppage, or access to a product the partner’s buyers already request. Do not claim savings or demand you have not measured.

Bring two options to the decision

Ask management for the proposed offer, the partner’s credible alternative, the resource each uses and the missing evidence. If the same capacity would otherwise earn US$0, the example’s US$11,500 contribution would be an increase. Check that spare capacity is real and how long it will last. Separate costs that change with the deal from costs already committed, and count displaced work only once.

The unit-economics and parent-support worksheets use annual figures. To reproduce a full year at the example’s steady monthly rate, multiply recurring amounts by 12 and keep the 6% fee unchanged. That gives US$600,000 billings, US$138,000 operator contribution and a US$156,000 alternative. Keep the alternative beside the results; do not deduct it again as an operating cost. A first-year ramp will need its actual schedule instead of twelve identical months.

Check the parent’s continuing support separately. Billings are not cash receipts: use Cash runway for actual collection dates, stock purchases and start-up spending.