> ## Documentation Index > Fetch the complete documentation index at: https://docs.m1amdocs.com/llms.txt > Use this file to discover all available pages before exploring further. # Agreements and Settlements An agreement is a type of contract between a Reseller (Service Provider) and a Merchant to resell a Merchant's product or to provide a billing channel for it. An agreement determines an optional monetary settlement between the two organizations. Resellers own and manage agreements. A Reseller can create an agreement with a Merchant if the Reseller and the Merchant have an existing active partnership and if active products are available from the Merchant. Merchants can approve or reject agreements. ## Settlement Models Agreements have an optional **Settlement Model** section where the Reseller can define the settlement model and monetary payout to the Merchant. When a Reseller enables a settlement model in an agreement, settlements are calculated based on the settlement type the Reseller defines in the agreement. Partner Ecosystem Management supports the following two kinds of settlement types: * **Flat Fee:** a fixed amount paid to the Merchant * **Revenue Share:** a percentage of the charge amount paid to the Merchant **Note:** Resellers can also set a minimum price for a Merchant's product. This value is used to calculate revenue share settlements when no product price is available or the actual price is lower than the minimum price. **Entitlement Types** Each settlement model has an **Entitlement Type**, which is the type that was selected for the product (**Standard** or **Quantity**). This is the kind of entitlement the customer can buy. For example: If the entitlement type is **Quantity** (Platform-managed only), this could designate the customer could buy license seats. The settlement is calculated according to the entitlement type. **Note:** If the entitlement type is **Quantity**, the Reseller must provide the quantity (number) when the entitlement is sent to the platform. The number will be used with the flat fee defined in settlements (if enabled). ## Settlement Processing Settlements are processed monthly and calculated based on the product lifecycle. The product lifecycle can be Platform-Managed (the Reseller is responsible for reselling the Merchant's product from their digital store), or Merchant-Managed (the Merchant sells the product directly to the end customer from their digital store). Partner Ecosystem Management processes settlements for each product lifecycle as follows: * **Platform-Managed**: The Merchant gets paid for every active subscription on a monthly basis * **Merchant-Managed**: The Merchant gets paid with every new subscription or renewal transaction **Note:** Settlements are calculated for successful transactions only. The following diagram illustrates how entitlements or transactions flow from the Reseller or Merchant through the agreement to the generation of a Settlement Report. Settlement diagram **Settlement Logic by Type and Product Lifecycle** | Settlement Type | Product Lifecycle | Type of Payment | Description | | - | - | - | - | | Flat Fee | Platform-Managed | Amount | The Merchant receives the flat fee indicated in the product agreement for every active subscription. If the entitlement type is **Quantity**, the Merchant receives the flat fee multiplied by the quantity (number). | | Flat Fee | Merchant-Managed | Amount | The Merchant receives the flat fee indicated in the agreement for every transaction, which is typically new and renewed subscriptions. | | Revenue Share | Platform-Managed | Merchant Share | The Merchant receives the Merchant share percentage indicated in the agreement for every active subscription. The Reseller's ordering system provides Partner Ecosystem Management with the charge information through a charge file. | | Revenue Share | Merchant-Managed | Merchant Share | The Merchant receives the Merchant share percentage indicated in the agreement for every transaction, which is typically new and renewed subscriptions. In the transaction details, the Merchant provides the charge information to Partner Ecosystem Management. | | **Flat Fee Example** | | | | Here's an example of the flat fee settlement type in action. A Reseller (Service Provider) wants to resell two Platform-managed products from their store. The Reseller has an agreement with a Merchant to sell a basic streaming product and a premium streaming product. The Reseller, in turn, wants to settle with the Merchant in the following way: * Basic streaming product: pay \$10.00 to the Merchant for every active subscription on a monthly basis * Premium streaming product: pay \$30.00 to the Merchant for every active subscription on a monthly basis Based on this, the Reseller has enabled a settlement model within each agreement. The Reseller has configured the settlement model in each agreement as follows: **Revenue Share Example** Here's an example of the revenue share settlement type in action. A Reseller (Service Provider) wants to resell two Platform-managed products from their store. The Reseller has an agreement with a Merchant to sell a basic streaming product and a premium streaming product. The Reseller, in turn, wants to settle with the Merchant in the following way: * 60% to the Merchant with the remainder going to the Reseller (40%) for every active subscription charge Based on this, the Reseller has enabled a settlement model within each agreement. The Reseller has configured the settlement model in each agreement as follows: Revenue share example **Parent topic:**[Partner Ecosystem Management Features](r_Features) This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.