When it comes to running an online business that revolves around software resell, an individual's skills largely determine their role and the business opportunities they can leverage.
It’s highly uncommon for a single person to possess all the necessary knowledge and skills required to both develop and successfully market the software to their audience. It takes years to learn how to program and code, so developers often simply focus on creating the software and leave the marketing aspect to someone else.
In larger companies, several teams are in charge of managing different aspects of the business, and software developers don’t have to worry about getting the product in front of their audience. The success of the company hedges on both their ability, and the skills of the marketing team, but the developers receive a paycheck at the end of the month, regardless of the marketing team’s results.
If the software developer is a smaller company consisting only of programmers or an individual, they don’t have that kind of luxury. In these cases, they also have to figure out the best approach for marketing their product if they’re hoping to make a profit.
Learning the necessary marketing skills is quite time-consuming. A much faster and easier approach would be to outsource their marketing efforts—and most of them do. The software developers often enter a business relationship with other agencies or individuals and allow them to resell their products for a profit.
This business model is known as white labeling, or, more specifically selling white label digital products. The original software manufacturer gives those with the necessary marketing experience the rights to rebrand or even modify the product to a certain extent and sell it to the end-users under their own brand. That’s where the term “white label” comes from—resellers receive the “raw” product and can choose to package it however they see fit.
The benefit software providers get from this business interaction is quite obvious—they get to generate revenue without investing any time, money, and effort in marketing. That said, this relationship is quite beneficial for resellers as well.
The most obvious advantage is the opportunity to make money, even if you don’t have a product. As a reseller, you are only concerned with the marketing aspect. That means there’s no cost regarding product development and testing. You can focus all your efforts on landing the sales.
The nature of this business relationship is symbiotic. Neither side can handle all of the business operations, and both bring a unique set of skills to the table. That’s why white labeling has proven to be an extremely successful business model—both sides stand to profit from joining forces.
An additional benefit resellers enjoy is the ability to brand the products as their own. When reselling software, you’ll have the opportunity to add your company’s name, logo, and colors to the product and build your own business along the way. The more sales you make, the higher your brand’s online visibility will be, and the easier it will become to attract new clients in the future.
Another thing to keep in mind is that you’re in no way limited to a single product or even a single supplier. As you grow your reselling business, you can add additional products and services to your portfolio and scale your profits by offering a wide range of products to your audience, becoming a truly successful computer software reseller.
Benefits of white labeling
Software developers (suppliers)
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Before you can start selling a developer’s software, you would have to sign a software reseller agreement that grants you software resell rights. These rights allow you to resell the product to end-users under your own name and define everything from the level of customization available to the price you can charge the end-users for the software.
Depending on the developer’s needs and the business goals they want to achieve, they can offer different types of resell rights to marketers. The four basic types of software resell rights are:
Master resell rights
Private label rights
Each type has its advantages and drawbacks. We’ll go over all four in detail, so you can fully understand their differences and choose the one you’ll benefit from the most when you start your online reselling business.
This is the standard type, and it’s pretty straightforward. Resell rights do exactly what you’d expect them to—they enable you to buy the original product and resell it as your own to end-customers.
That said, even the standard resell rights can have a few variations and may include certain limitations you should be aware of.
The first thing you should pay attention to is whether or not the rights are exclusive. Exclusive rights imply that you’re the only one allowed to resell the product in a particular market. This can be a certain geographic area—for instance, Europe—or even the entirety of the target market.
One thing to keep in mind regarding exclusive license agreements is that you’ll likely be required to meet a certain quota on a monthly or annual basis. This means you’re required to make a certain amount of sales.
This is a way for the supplier to protect themselves since you’re buying a set amount of products beforehand, so they don’t hedge on the success of your marketing efforts. Instead, if you fail to meet the quota, you’ll be the one at a loss. That is why exclusive reseller rights are typically taken on only by experienced resellers, usually agencies that have been in the business for a while.
Non-exclusive rights offer other resellers the same opportunity to market the products. This means multiple people will be selling the exact same solution, under different brands. You’ll have to get creative with your offers and execute your marketing campaigns flawlessly in order to beat out the competition.
Another limitation you might encounter with standard resell rights is concerning the price point. Some developers will only allow you to increase the initial price by a certain amount. If that’s the case, you should carefully consider how much you stand to profit from each sale before signing the agreement.
Master resell rights, as you’d expect, are a bit different from the standard ones, in that they offer more possibilities to the reseller. As a master reseller, you can offer your clients the opportunity to resell the product further, apart from selling to end-users yourself.
This type of “meta reselling” allows you to engage both the end-users as well as other companies, agencies, marketers, and entrepreneurs who are interested in becoming resellers themselves.
From a software developer’s standpoint, master resell rights give them an influx of profit immediately. Once they sell the master resell rights, they no longer have to worry about the product, apart from support and maintenance in certain cases, and can start developing new software right away since they’ve already made a profit.
With that in mind, if you’re interested in obtaining the master resell rights to a product, you should be prepared to make a decent upfront investment. If you have sufficient marketing experience, however, you can make a hefty profit with a master resell license.
Remember that you’ll be making money off of every sale you make as well as every sale one of your resellers makes!
Resell unlimited copies of the software
Offer the software in a bundle with products from different suppliers
Give your clients the right to resell the product
Create a membership site for the software
Sell on specific websites like eBay
Gift software subscriptions to clients
You should also inquire about the ability to make any changes to the initial software. In some cases, your clients might request additional features or functionality. If you have the necessary experience and the software developer allows you to do so, there’s no reason why you shouldn’t provide these features.
Private label rights (PLR) are a bit different than the two aforementioned types, in that they allow you to edit the product as much as you want and claim it as your own creation.
The difference here isn’t in the ability to customize the product, since rebranding is an inherent type of white labeling, regardless of the type of rights. With PLR, the main goal is seldom reselling.
Most often, people buy private label rights for their own purposes. If you purchase a piece of content, like a blog post or an eBook, using PRL, you’ll most likely leverage it to generate leads or add it as an asset to your overall content marketing strategy.
The most prominent example of PLR is ghostwriting. While other people create the articles, you can edit them as you see fit and post them under your own name. This is a great way to boost your credibility online, but you should also be aware of the drawbacks.
Given that your name is on the piece of content, you should thoroughly go through each article to ensure it satisfies the quality standards, and that the content is useful and relevant to your audience.
While this type of right may sound odd at a glance, it is often obtained and utilized by businesses who want to offer free value to their customers, as a way of increasing engagement or generating new leads.
The principle is quite similar to PLR, with one major distinction—regarding giveaway rights, the goal isn’t to use the product yourself but rather to distribute it to your clients and customers under your own name.
It basically comes down to buying a certain product that you’ll be handing out free of charge. Still, it’s necessary to define the rights this way, due to branding. The goal isn’t to give away someone else’s products, but rather to boost your own brand while providing value.
If you were running a retail store, for instance, giveaway rights would allow you to buy plain mugs and print your company’s name and logo on them before you start giving them away. The main idea behind this type of right is leveraging the white label opportunities it provides to build brand awareness.
Now that we’ve covered the main four types of resell rights, here’s a quick comparison table:
Types of resell rights
Master resell rights
Private label rights
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There are plenty of different white label solutions out there that you could resell. When weighing your options, the main thing you should focus on is the resell value of the products you’re choosing between.
The key things to consider are:
When was the product published?
How much competition will you be facing?
What’s the product price?
Does the product come with a marketing package?
When it comes to reselling software, keep in mind that the IT industry is constantly changing and evolving. A solution that would’ve been considered a breakthrough a year ago might be outdated today, and you’ll likely have a hard time selling it. Take your time to discern when the product was first published and how long it’s been on the market. Typically, the fresher the software, the better.
Unless you’re offering a solution with unique features and functionality that focuses on a specific aspect of your clients’ business, you’ll be facing fierce competition in the IT industry. That’s not to say that you can’t be successful. With efficient marketing strategies and creative offers, you can make quite a profit. That said, be sure to check out the competition, their offers, and strategies, and figure out how you can make your products stand out.
As we’ve explained, the product price isn’t everything, but that doesn’t mean it’s not important. It will both dictate how much you’ll make with each sale, as well as how easy or difficult it would be for your clients to commit to the purchase.
If you’re reselling a product with a high initial price point, there won’t be much room to further increase the price. The better option is to sign an agreement with the supplier where you’ll receive commissions—a percentage of the product’s costs—on every sale you make. This will allow you to offer the products to clients at reasonable prices while still earning a decent profit.
Some suppliers offer accompanying marketing materials alongside their white label solutions. Things like pre-built sales pages, email templates, and banners can help you set up your business faster and will facilitate your marketing efforts.
That said, make sure to check the quality of the marketing packages first. You don’t want to feature poorly-designed banners that will deter potential customers instead of drawing them in. Another thing to keep in mind is that other resellers will receive the exact same marketing package, so take your time to fully customize the templates and consider tweaking the marketing messages.
As a reseller, you ultimately want to earn as much profit as you can. Although one product may appear more enticing due to the larger profit margins, you should also consider how difficult it would be to actually generate sales. If you earn $30 per sale but only manage to sell a few products, you’d be better off selling a different solution at a $10 margin but selling hundreds of them.
Remember that you’re building a business and don’t be blindsided by promises of huge margins. Take all the different factors into consideration and play for the long game. Over time, as you add more white label solutions to your offer and fine-tune your marketing strategies, you will gradually grow your business and scale your profits.
If you’re eager to start your reselling business today—SellSaaS is the perfect place to start!
We offer a variety of premium quality, fully customizable white label software solutions that you can start reselling in a matter of minutes.
Become CEO of your own lead generation software company, just follow our battle-tested guidelines and rake in the profits.