In addition to a business’s traditional revenue streams (e.g., sales, services, and advertising), a value-added reseller (VAR) can represent a valuable additional source of income.
VARs are companies or individual contractors who purchase products from manufacturers or other vendors, then add features (such as installation, customization, and technical support) before selling the finished product to customers.
What is a Value-Added Reseller?
A value-added reseller (VAR) is a company that purchases products from vendors and resells them to customers, managing operations and customer relationships on behalf of the vendor. What sets VARs apart is the “value-added” component—they enhance the original product by offering additional services such as installation, customization, technical support, or training, tailored to the customer’s needs.
This business model is especially common in B2B technology sectors, where VARs create new revenue opportunities for both vendors and customers by filling service gaps that vendors may not address efficiently. Increasingly, VARs are also gaining traction in B2C markets, providing consumers with the convenience of a single, trusted point of contact for both products and supporting services.
Synonyms
- VAR
- Software Reseller
- White Labeling
- Reseller Partner
The Value-Added Reseller Business Model
Because VARs add features or services to the product before selling it, they can charge a premium for their services.
There are two ways to be a VAR:
- Value-Added Services: In this business model, the VAR provides additional professional services to the customer (such as installation, customization, or technical support). The customer may be willing to pay a premium for these services in addition to white-labeled services from the original vendor.
- Value-Added Products: A VAR may also purchase products from a vendor, then add features or components to the product before selling it. This could include additional software, hardware, accessories, or anything else that enhances the original item’s value.
This business model works well when there is a clear demand in the market for specialized products and services that manufacturers may not be able to provide quickly or economically. It also allows vendors to leverage existing sales channels without investing in creating their own.
VARs may also offer additional services such as marketing support, system integration, ongoing maintenance, and training. This can be a great way to differentiate themselves from competitors and add further value to customers.
Understanding How Value-Added Resellers Work
Selling third-party products as a VAR can effectively leverage existing relationships and provide customers with specialized products. As long as the added value is clear, it can be a great way for businesses to increase revenue streams and differentiate themselves in their markets.
The VAR Model
- A VAR purchases products from a vendor for a predetermined price (typically lower than retail), then customizes and re-sells them to customers.
- Usually, the VAR takes on the responsibility of providing additional services such as order fulfillment, installation, customization, training, and support that may not be available directly from the manufacturer. By taking on these responsibilities, the VAR can offer their customers an enhanced product.
- In return for their services, the VAR charges a premium price that allows them to make a profit.
- The end result is a win-win situation for both vendors and customers.
The bottom line is that value-added resellers can provide great benefits to businesses who are looking to add new sources of income and increase their customer.
VAR Agreements and Why They Matter
A VAR agreement is a formal contract between a vendor and a value-added reseller that defines their business relationship. It typically covers pricing, sales territory, service obligations, branding, and liability, ensuring both parties understand their roles and responsibilities.
These agreements protect the vendor by maintaining product quality and brand integrity, while protecting the VAR by guaranteeing pricing, territory, and support rights. By clearly aligning expectations, VAR agreements help build trust, reduce risk, and create a foundation for long-term, profitable partnerships.
Advantages of Working With VARs
For both the vendor and the customer, there are many advantages to working with VARs:
- Product vendors can boost sales without sacrificing product margins or investing in additional sales infrastructure.
- For customers, VARs can provide valuable customization and personalized service that may not be available from the original vendor.
- VARs make it easier for customers to purchase products as they can rely on a single point of contact for multiple needs, improving the customer experience.
- VARs are often more agile and flexible than traditional product vendors, as they can quickly and easily customize products for specific customer needs.
- Value-added resellers improve relationships with customers by giving them access to cutting-edge products and services that may not be available from the original vendor.
- Original solution providers and manufacturers can maximize revenue growth without having to constantly find new customers—the reseller takes care of that.
These benefits often make third-party resale the best distribution channel for manufacturers and technology vendors, especially when the market is highly competitive or specialized.
Challenges of Working With VARs
Working with VARs does come with its own set of challenges. These include:
- VARs may not always be familiar with the product or technology they are selling, meaning they may not be able to provide adequate support or advice.
- VARs must be mindful when it comes to competitive pricing, as they may end up competing against the vendor’s own direct sales channels.
- Reseller partners may not always be trustworthy, meaning the vendor must ensure that their products are being sold properly.
- A reseller must have the technical expertise in their niche and be able to provide value-added services in order to differentiate themselves from the competition.
Because of these difficulties, it is important for vendors to thoroughly vet potential value-added resellers before entering into a partnership.
How to Increase VAR Sales
Increasing sales as a reseller partner requires a strategic approach that combines strong vendor relationships, targeted marketing, and a focus on delivering value to customers. Here are key strategies VARs can use to grow revenue:
1. Strengthen Vendor Partnerships
Collaborate closely with vendors to gain in-depth product knowledge, access training resources, and receive support for marketing or sales initiatives. Strong vendor relationships can also unlock special pricing, co-marketing opportunities, and early access to new products.
2. Offer High-Value Services
Identify services that complement the core product, such as installation, customization, integration, or technical support, that meet customers’ specific needs. Complementary, high-value services differentiate your offering from competitors and give customers a reason to choose your company over others.
3. Target the Right Customers
Focus on industries, market segments, or customer profiles where your product and services solve pressing problems. Understanding customer needs helps tailor offerings and marketing messages that resonate.
4. Leverage Marketing and Sales Enablement Tools
Use demos, case studies, content marketing, and sales automation to showcase your expertise and the benefits of your value-added services. Equipping your sales team with the right tools increases efficiency and conversion rates.
5. Monitor Performance and Optimize Offerings
Track sales data, customer feedback, and service adoption to identify what works and where improvements are needed. Continuously refining pricing, services, and messaging ensures your VAR business remains competitive and profitable.
VAR vs. MSP
An MSP (managed service provider) is a specific type of value-added reseller. But there are some subtle differences between the two.
- MSPs tend to focus more on providing services than selling products, whereas VARs tend to focus on product sales.
- When selling a software product, an MSP will normally provide ongoing support and maintenance services beyond the initial implementation of products, whereas VARs may just provide initial installation services, or simply resell a product.
- MSPs have more of a technical focus, as they are expected to have an in-depth understanding of the software systems and technologies they support.
VAR vs. OEM
An OEM (original equipment manufacturer) is a company that designs, manufactures, and distributes finished goods to customers.
In contrast, VARs purchase goods from other vendors and then resell them with added services such as customization, training and support.
VARs are not responsible for the design or manufacture of the products they sell—they use a two-tier distribution model to buy the products and then resell them. This means VARs are more agile and able to adapt their offerings to meet customers’ needs more quickly.
How CPQ Helps VARs Sell More Efficiently
CPQ software is a must-have for VARs, as it helps automate and streamline the sales process. CPQ software enables VARs to quickly create quotes that are accurate and up-to-date with the latest pricing information.
It also makes it easier to track customer orders, manage stock levels, and provide customers with quick access to product information.
Using CPQ software, VARs can deliver better customer service and more accurate quotes, resulting in a smoother sales process, faster quote-to-cash (QTC), and improved customer satisfaction.
Especially for companies with complex pricing models (e.g., enterprise service contracts) or high product complexity, CPQ software automates time-consuming manual processes like pricing calculations, configuration, and approvals, making the sales process less labor-intensive.
People Also Ask
What are some examples of companies that are value-added resellers?
Some examples of value-added resellers (VARs) include computer hardware retailers, software companies, IT consulting firms, mobile device retailers such as Apple and Samsung, cloud computing providers, automobile parts retailers, and home appliance and furniture stores.
Why should I use a value-added reseller?
Using a value-added reseller (VAR) to purchase products can help save time, money, and resources. VARs can provide specialized services such as installation, support, customization, and training that may otherwise be difficult or cost-prohibitive for businesses.
What’s the difference between a value-added reseller (VAR) and white labeling?
A VAR resells a vendor’s product while adding services, support, or customization to increase value for the end customer, typically keeping the vendor’s brand. White labeling, in contrast, involves rebranding a product as your own with minimal additional services; the focus is on brand rather than enhancement. Some companies may combine both approaches, offering branded products along with value-added services.