Value-add reselling (VAR) has been around since the days when AT&T had its own phone network but sold you long distance service from another carrier. Today, it's common practice for IT solution providers to offer their clients additional expertise through outsourcing, consulting, or other means. However, what exactly does a "value add" mean? And how do these firms make money doing so? Let’s take a look at this type of relationship, as well as some of the challenges faced by both sides involved.
First off, let’s briefly define “software” and explain why we need to use it here. Software refers to any program designed to perform specific tasks such as accounting, programming, or even writing songs on your computer. These programs are often created with the help of special tools called compilers, which translate source code into machine language. This process makes it possible to run the program without needing to know all of the specifics about how the code was written.
The term “value add” comes from the idea that if someone else wrote the code for us, there would be no reason to pay them again. Instead, they'd just charge us more than our original payment because they took extra time to write something that wasn't already included in the base price. That doesn't sound like much fun.
That said, most people don't actually want to buy everything themselves. They may not have enough knowledge, time, or resources to create solutions for every problem that arises. In fact, many times you'll find yourself in situations where you really can't solve a particular issue yourself. You might try searching online for answers, but come up empty handed. Or maybe you're working alone and don't feel comfortable asking friends or colleagues for advice. It's perfectly normal to seek out outside assistance at one point or another.
This is where value-add reselling becomes important. A provider will typically provide access to technical support, training sessions, and/or consulting services. The result is that you get expert guidance directly from those who've solved similar problems before. If you ever need to hire a lawyer, accountant, or doctor, chances are good that you were referred to them by someone who successfully used their services previously. This is essentially how value-add reselling works.
How does this benefit you? Well, if you're looking for outsourced tech support, say, then you could save a ton of money over paying hourly wages for in-house staff. Similarly, if you need professional legal representation, you can probably afford better quality work than you could produce on your own. As far as consultants go, you won't necessarily have to spend hours trying to figure things out yourself. Rather, you'll likely receive valuable insight after receiving input from experts in the field.
Nowadays, VAR relationships aren't limited to high-end IT needs either. Many small businesses rely heavily on these types of partnerships to supplement their income streams during slow periods. For instance, a landscaper might partner with a local tree surgeon to ensure he gets paid regardless of whether his trees grow. Likewise, a real estate agent might enlist the help of a property manager to handle maintenance issues while she focuses on selling homes.
There are plenty of ways for organizations to leverage value-adding partners, including consulting, hosting, application development, website design, and many others. One of the best known examples today is outsourcing. When a large organization decides to contract out certain functions instead of performing them internally, they're engaging in value-add reselling.
As mentioned above, there are numerous benefits to having your employees manage certain aspects of operations rather than relying solely on external contractors. But sometimes outsourcing isn't feasible for reasons beyond cost concerns. Sometimes you simply lack the necessary skills or experience to complete the task. At that point, you'll usually turn to vendors who specialize in providing custom solutions for specific industries.
For instance, consider a law office that wants to expand its clientele by offering document review services. Typically, these professionals employ specialized equipment and personnel to scan thousands of pages per day. By partnering with a vendor specializing in scanning documents, they can avoid spending hundreds of dollars each month leasing scanners that sit idle 90 percent of the time. Plus, they can offer faster turnaround times compared to traditional methods of document reviews.
However, not everyone can become a full-fledged consultant overnight. Some require years of education and hands-on experience before they're able to pass certification tests required by various regulatory bodies. Others must obtain certifications related to their specific industry. So how do you decide whom to trust with your data? How do you determine whether a potential partnership is worth taking advantage of?
One key distinction between a VAR and a reseller is their level of control over the customer relationship. With a VAR, you retain ultimate ownership of the product itself. Your company retains sole responsibility for ensuring that the service meets your specifications and expectations.
By contrast, a reseller acts as an intermediary between two parties who share equal responsibilities for creating a successful outcome. Both the buyer and seller agree to adhere to agreed upon terms set forth in an agreement. If the transaction goes smoothly, both parties win. However, if it doesn't, only one party loses. While a VAR requires less risk due to greater control, a reseller offers lower margins due to increased competition.
In addition, a VAR provides ongoing support throughout the entire life cycle of a project. Resellers tend to focus on short-term projects whose lifetime duration is measured in weeks or months. Because they generally cannot guarantee anything longer than several quarters, they also bear significantly higher risks regarding unexpected costs associated with unforeseen events. On the flip side, resellers often provide superior flexibility by allowing companies to choose their preferred delivery method based on individual preferences.
Lastly, although both models allow for customization, a VAR allows for greater scope. VARs are capable of developing unique applications tailored to meet the requirements of a single customer. Resellers, on the other hand, are primarily focused on serving multiple clients within a given niche market.
While there are many different kinds of customers, the most popular ones include government entities, educational institutions, healthcare facilities, financial institutions, and corporate offices. Of course, VARs typically cater specifically towards enterprise customers who demand reliable infrastructure and cutting edge technologies.
Government agencies frequently engage in value-add reselling to keep costs low while still meeting strict compliance standards. Organizations operating under highly regulated environments such as hospitals, schools, and prisons commonly utilize VARs to reduce operational expenses and increase efficiency.
Likewise, VARs play an integral role in helping medical professionals treat patients effectively and efficiently. Not only do they supply physicians with state-of-the art computers and software, but they also train doctors on proper procedures using specialized patient simulators. Additionally, they assist in maintaining clinical records and updating relevant information on electronic health records systems.
Financial institutions are another major target for value-add resellers. Banks, credit unions, insurance companies, investment houses, and private equity firms regularly depend on third-parties to maintain accurate accounts. For example, banks and credit unions often subcontract with third-party clearinghouses to settle transactions quickly and securely. Meanwhile, hedge funds often collaborate with consulting firms to develop new strategies and execute trades accordingly.
Finally, corporations in general often prefer to invest in internal teams whenever possible. After all, it's difficult to attract talent when you have poor perks and compensation packages. Companies therefore often opt for outsourcing to retain talented individuals who might otherwise leave for greener pastures elsewhere.
Ultimately, value-add resellers act as middlemen between buyers and sellers. Although they're responsible for managing their respective assets, neither party bears total liability for any errors or omissions.
Although it involves significant risk, value-add reselling remains extremely profitable for those companies willing to embrace it. Ultimately, it lets companies reap the rewards of outsourced labor without suffering the consequences of hiring inexperienced workers.
The term "value added" describes any service or product that makes something better than it was before. In other words, you can think of this as an example of how a VAR adds value to your organization's offerings.
VAR stands for Value Added Reseller and refers to firms that enhance the value of third party products through customizing them for resale to consumers or businesses. The value added comes from the extra features they include with their packages -- things like additional equipment, increased storage capacity, higher levels of support, etc. These are often referred to as add ons or extensions.
Value-Added Resellers (or VARS) have been around since at least the 1970s when IBM offered its PC compatible hardware and operating systems under a licensing agreement. However, since then, there has been explosive growth in the number of such companies over the past few decades. Today, according to Gartner, more than 3 million people work as VARs worldwide. That's a lot of folks!
In fact, these days, nearly every industry sector seems to be represented among VARs: healthcare, telecommunications, financial institutions, manufacturing, retail, education, government agencies, and even tech giants like Apple, Microsoft, Google, Amazon, Intel, HP, Dell, Cisco, Samsung, LG, and so on.
So, if you're looking for a job, consider becoming one yourself. It may not require much effort, but it will certainly pay off handsomely once you start working. We'll explain why below...
According to Statista, there were about 1.1 million VARs listed in the U.S. alone in 2017. That represents about 8% of all IT professionals employed full time, which means that almost 10% of all workers who manage computer networks and servers are VARs.
That percentage might seem high compared to the average rate of employment for IT managers overall, which is only 5%. However, there are several factors that could explain this disparity between the two figures. For instance, while most traditional IT jobs involve managing computers, some VAR positions also entail selling technical solutions directly to customers. Additionally, many VARs actually specialize in certain areas, such as cloud computing, cybersecurity, networking, and mobile apps.
As we said earlier, the number of VARs in the United States is growing steadily each year. According to BusinessWire, total revenue generated by these firms reached $9 billion last year, up 27% from 2016. This figure represents more than 2% of all revenues earned by professional employees in the U.S., and more than 5% of those made by IT specialists.
If you've ever worked as a VAR, chances are good that you know exactly what we mean by this term. After all, you understand precisely what makes a given piece of equipment or system unique. You probably already possess a deep knowledge of the inner workings of various devices and applications. And because you understand the ins and outs of different platforms and technologies, you might be able to find ways to make them run faster, easier, or cheaper -- making your clients' lives just a little bit simpler.
Nowadays, however, more and more organizations are turning towards outsourcing their IT departments. Why would anyone want to do that? Because they don't necessarily need to hire a dedicated team of experts in order to get their own infrastructure running properly. Instead, they can simply outsource everything to a single provider, called a Value - Added Reseller (or VAR).
This type of arrangement allows the client to focus solely on his core competencies. He doesn't have to worry about keeping tabs on the day-to-day operations of his network and server infrastructures. All he needs to do is give the customer access to a well-trained specialist who knows how to maintain and optimize her system. When problems arise, she can call upon the expertise of others to help solve them.
And that saves lots of money, too. As long as you charge enough for your services, you'll earn back whatever cost savings you achieve by delegating the management of your IT department to someone else.
Many big names in business employ VARs today: Dell, Hewlett Packard Enterprise, Lenovo, Microsoft, Oracle, SAP, VMware, NetApp, AT&T, GE Digital, Accenture, EMC, Fujitsu, and more. But small businesses should take note, too. Many smaller companies use VARs to save money on their IT budgets. They're especially common in fields where capital costs are relatively low, such as construction and engineering.
We mentioned above that a VAR is basically a consultant who specializes in helping users improve the performance of their IT assets. A typical role involves providing support services using specialized tools, and sometimes proprietary ones, designed specifically for the purpose of improving efficiency.
Because they tend to be knowledgeable about specific types of hardware and/or software, VARs usually have extensive experience with particular models and manufacturers. Thus, they typically offer advice about setting up new deployments, troubleshooting issues, upgrading existing machines, optimizing processes, and generally getting the best possible results out of their clients' resources.
Additionally, some VARs provide consulting services related to data center design and deployment, information security, and application development. If you sell anything online, it's likely that you'll come across a VAR offering similar kinds of services.
Finally, it's important to realize that VARs aren't always limited to physical items. Some VARs specialize in digital goods, such as eBooks, training programs, videos, webinars, and so forth. Others offer virtual assistance, including remote desktop sessions, phone consultations, video conferencing, and chat rooms.
Lastly, let us mention that VARs are frequently hired by large enterprises to handle internal projects involving IT maintenance and upgrades. While it's true that they perform a wide variety of tasks, the majority of their activity revolves around the optimization of existing hardware and software installations.
When you think of a Value-Added Reseller, you probably envision a person wearing a white lab coat standing behind a desk holding a stack of papers. Or maybe you picture him sitting in front of a computer screen typing away furiously, occasionally glancing down at his notes and nodding emphatically.
But, nowadays, it seems that less experienced individuals fill far more prominent roles within VAR companies than they used to. There are still plenty of people involved in sales and administration, yes. But increasingly, VARs are hiring staff members who are highly skilled technically speaking, and who hold advanced degrees that allow them to develop and implement cutting edge strategies.
It appears that the trend started gaining momentum during the late 2000s and early 2010s. At the same time, demand for qualified personnel skyrocketed thanks to the emergence of the Information Technology Revolution. So, businesses began seeking out talented individuals who could lead projects and oversee teams of specialists.
Today, many of the world's leading companies rely on VARs to keep their IT infrastructure functioning smoothly. Here's a list of ten companies whose entire business depends on VARs:
HP Enterprise Services
These firms generate billions of dollars in annual profits thanks to the efforts of thousands of VARs scattered throughout North America, Europe, Asia, Australia, India, Latin America, and Africa.
Why shouldn't you try your hand at being one? Just remember that the rewards can be great, provided that you follow the right path. Keep reading for our guide to starting your own successful VAR business.
The world has been moving towards an economy driven by digital and technological advancements. However, these advances have also brought about new challenges with it. One such challenge is how to protect your data from being stolen by hackers who can access information through malware or other malicious means. This is where you need the help of a cybersecurity expert like a VAR who specializes in this field. A value-add reseller (VAR) is a service provider that offers its customers additional support beyond their original product or service. In addition to providing customer support, they may offer custom solutions based on specialized expertise. Value-added resellers (VARs) in the IT industry are businesses whose primary function is to provide software development and maintenance services to clients. These firms work closely with enterprise organizations to implement effective strategies to manage and secure their systems and networks.
How exactly do VARs operate? What are some common functions performed by them? How did they get started as well as why would anyone want to partner with one? We will take a look at all of those questions below!
As we mentioned above, VARs specialize in various technologies including software applications, cloud computing platforms, network infrastructure, hardware devices, etc. It’s no surprise then that many large Fortune 500 companies rely on VARs because they know that hiring internal resources to develop these types of solutions isn’t feasible given budget constraints and time frames. Instead, they turn to experts like VARs to assist in developing complex projects that require extensive knowledge.
This partnership between corporations and VARs often starts out as simple outsourcing agreements but over time grows into more substantial relationships. The most popular type of relationship involves the sharing of intellectual property rights. As a result, both parties benefit greatly from working together. For example, if a corporation decides to purchase a particular piece of software, they may choose to hire a VAR to customize or enhance the solution before selling it to others. If the software was bought directly from the vendor, there might be significant licensing fees associated with using the software. By partnering up with a professional VAR, however, they avoid dealing with these issues entirely since they only pay for the customization needed. They don't even worry about paying royalties either. Instead, they simply pass along any profits earned after the sale.
In addition to helping corporations create innovative solutions, VARs also play an important role when it comes to supporting them once they’ve launched their products. Since VARs typically have much greater technical experience than the average employee, they tend to be better equipped to troubleshoot problems that arise within corporate environments. Furthermore, they can perform tasks such as upgrading operating systems, installing patches and updates, configuring servers, managing databases, implementing firewalls, and repairing networking equipment. All of these responsibilities allow for smoother operations down the road.
With so many benefits involved, it makes sense why almost every major corporation relies on VARs to keep everything running smoothly. There are plenty of reasons why someone would want to become a VAR themselves though. Here are just a few:
1. You love programming. Perhaps you are interested in learning more about coding languages and frameworks while making money doing something you enjoy. If that's the case, consider becoming a web developer. Web developers write code used to build websites and mobile apps. Many people start off as freelancers first before transitioning to full-time employment later on. This allows them to make a decent amount of cash without having to put too much pressure on themselves.
2. Want to learn about different industries and tech trends? Maybe you're passionate about marketing and analytics. Or perhaps you'd rather focus on sales instead. Whatever your interests are, there's probably a career path suited to you somewhere within the IT space. And, if you happen to be good at writing copy, you could always work for a content management system (CMS) platform like WordPress.com. CMSes are basically website building tools that enable users to easily share text, photos, videos, music, and other media across multiple online destinations.
3. Still not sure what you want to do? Perhaps you've always wanted to own your own business. That said, you might not necessarily feel comfortable starting out as a sole proprietor. To mitigate risks, you should check out several opportunities available to you as a VAR. Take note that not all VARs sell direct to consumers. Some only deal with larger companies while others prefer to stay closer to home. Either way, you'll likely find a niche that suits your skillset perfectly.
4. Have you ever considered opening a franchise? While franchises usually involve buying a brand name and transferring ownership to another individual, you can still run your own small business under the same umbrella. For instance, if you were already proficient at creating custom software applications, you could open a consulting practice specializing in IT services. You could charge anywhere from $30k - $100k per year depending on your location and clientele base. Once again, this depends heavily on whether or not you decide to go the franchising route. Keep in mind that most franchise owners must follow strict guidelines set forth by the franchisor. Otherwise known as the parent company, they typically dictate things like pricing structures, advertising methods, and overall branding standards. So, make sure that you understand the rules before entering into negotiations with any prospective franchisors.
5. Do you think you have valuable insights that could lead to success in another area? Maybe you're a creative thinker. Or maybe you excel at problem solving. Regardless of your skill levels, you could potentially turn yourself into a consultant. Consulting is essentially a job title that refers to individuals who advise and counsel others on matters related to specific fields. Whether you consult with private individuals, public agencies, nonprofit organizations, government institutions, or businesses, you'll certainly earn a lot of money if you land the gig.
6. Are you looking to expand your current income stream? Maybe you want to invest in real estate or buy commercial properties. If so, you can try investing in startups. Startups refer to businesses that are less than five years old. Although startup investments are risky, you can expect to reap high returns if you're able to identify a solid investment opportunity early enough. Of course, you'll have to be willing to risk capital if you plan on taking part in this venture.
7. Would you just like to see how far you can push boundaries? Then you should consider becoming a virtual assistant (VA). Virtual assistants are professionals who provide administrative assistance to clients via phone calls, emails and video conferences. Because VA jobs are generally flexible, you won't have to spend long hours sitting behind a desk. Most VAs work remotely which gives you the freedom to travel throughout the day. Additionally, you can pick your own schedule. Depending on the size of your employer, you could even receive health insurance coverage.
Despite the fact that Value Added Reseller stands for "value added" in English, it actually originated as "value added reseller," meaning a retailer that sells goods or services for a profit. Nowadays, it's commonly referred to as a Value Added Reseller (VAR), which is short for "Value Added Resellers."
Companies use VARs to cut costs and save time. When a company hires a VAR, they can bypass hiring employees or purchasing expensive software licenses. With a VAR, the company doesn't have to worry about keeping track of inventory and handling shipping logistics. They also don't have to worry about training staff members on the latest features offered by the programs.
Another reason why companies use VARs is because they can leverage their existing partnerships with vendors. Through these connections, they gain access to powerful software products that normally aren't affordable to smaller enterprises. Moreover, they can sometimes negotiate special deals that give them discounts and free trials. On top of that, VARs can add value to their products by offering unique features and enhancements unavailable elsewhere. Their products are made to meet the needs of large companies and small ones alike.
Cybersecurity is a growing concern around the globe due to the threat posed by sophisticated hacking groups and advanced viruses. Cybercriminals are increasingly targeting companies' critical assets -- financial records, trade secrets, personal identity, and confidential documents -- which puts everyone at risk. Fortunately, there are ways to defend against these attacks. For starters, you should install anti-virus software on your computers, phones, and tablets. Next, you should ensure that your Wi-Fi network is protected by encryption. Finally, you should regularly upgrade your passwords and change them whenever possible.
To sum it up, a value-added reseller is a business entity that provides services and/or products to customers outside of their usual scope. Often times, they act as middlemen between clients and manufacturers. They may also assist with installation, training, and ongoing support.
Become CEO of your own lead generation software company, just follow our battle-tested guidelines and rake in the profits.