Businesses across industries increasingly rely on software to drive efficiency, productivity, and growth. However, developing software in-house is expensive and time-consuming, which has led to the rise of software resellers.
Software resellers provide a cost-effective and efficient way for businesses to access and implement the software they need. This blog will look in detail at a critical view of the reseller’s business model of software: how it works, the pros, and the cons. You will know more by the end, using this as a business model to suit your company’s needs.
What is the Software Reseller Business Model?
The basis for the software resale business model is purchasing software from developers or suppliers and then reselling it to companies or end users. Resellers are not developers of the software but may just act as intermediaries to add value to basic services such as integration, support, and customization that could make it much easier for the customer to accept and use the program.
Adding Value Beyond Just Selling
Software resellers are not just intermediaries. They are problem solvers. They make sure that the software is correctly fitted to the specific needs of a particular client. In this light, a custom software reseller program enables businesses to customize software for niche industries or clients with specialized needs. This would include modification to user interfaces, additional functionality, or integration of the software with existing systems.
Over time, resellers often turn into trusted mentors and advisors in the process of migrating business processes to use the software solution to implant, maintain, and optimize. Moreover, resellers provide essential services like:
- Installation and Setup: Helping businesses set up the software, ensuring a smooth implementation.
- Customer Support: Offering ongoing support and troubleshooting to clients who may encounter issues.
- Training: Resellers play a crucial role as educators, providing end-users with the knowledge and resources they need to make the most out of the software. They offer comprehensive training programs to ensure that clients are fully equipped to use the software effectively.
- Customization: Tailoring software to specific business needs, which might include modifying workflows, creating additional features, or integrating the software with other business systems.
For example, a software VAR might sell an out-of-the-box CRM system and then customize it to meet the specific workflow of the retail concern, making it much more valuable than a generic solution. Resell software is very often packaged with these additional services, thus making them much more attractive to businesses requiring tailored solutions.
Types of Software Resellers
Resellers can specialize in different types of software, ranging from ERP systems, CRM tools, and white label software to resell. The flexibility in the products they offer means that software resellers can target a broad range of industries, from small businesses to large enterprises.
There are various types of software for resellers, including:
- Off-the-shelf software: Generic software that meets a wide range of needs for multiple industries.
- White-label software: This allows resellers to rebrand the software as their own, which is particularly beneficial for businesses looking to expand their product offerings without the overhead of software development.
- Custom software: Tailored to meet the specific needs of a particular client or industry.
The Importance of Software Reseller Agreements
A critical element of the software reseller business model is the software reseller agreement. This legal contract governs the relationship between the reseller and the software vendor. The agreement lays out:
- Pricing Terms: How much the reseller will pay for the software, and what markup they can charge when selling it to end-users?
- Customization Rights: Some software reseller agreements allow resellers to modify or customize the software to suit the end-user’s needs. This flexibility is crucial for value-added resellers who specialize in customization and support.
- Support and Maintenance: The agreement often includes terms on the support services the vendor will provide to the reseller, including software updates, technical support, and troubleshooting.
- White Label Rights: In some agreements, the reseller is allowed to rebrand the software as their own. A white label software reseller agreement permits the reseller to put their branding on the software, allowing them to offer it to their clients as a proprietary solution.
For example, if a reseller participates in a software service reseller agreement, they can sell SaaS products under a subscription model while also rebranding the software under their company’s name. This allows resellers to build long-term customer relationships while offering cutting-edge software solutions.
Flexibility and Growth with Reseller Arrangements
This software reseller contract can often allow the reseller to be flexible, opening a world of opportunities.
The flexibility may range from features on various pricing models where resellers are independent of price setting based on the needs of their clients or according to industry standards. Moreover, value-added reseller software agreements can add an array of services, such as support and training, which will further streams of revenue to resellers’ services.
It also gives an outstanding opportunity for businesses of any type looking to scale by offering diversification without needing heavy investment in development. A well-structured software reseller program can be a lucrative venture for companies looking to provide high-quality software solutions without building them from the ground up.
How Does the Software Reseller Model Work?
This software reseller model creates a partnership between the software developers and the resellers. Resellers then sell the product to an end user, usually with additional support and customization. The process is described below:
Partnership with a Vendor
Software resellers usually start by partnering with a software vendor or developer. They execute a software reseller agreement that lists the terms of resale, including a percent discount on the software license, level of customer support, and price. The reseller also becomes a member of the software developer’s reseller program to offer special pricing to customers for customized products.
Value Addition
These are the folks who do installation, training, customization, and ongoing support. Sometimes, an erroneous concept describes this as the software value added reseller model because the reseller meaning does not simply sell incremental software but offers auxiliary services to enhance a product’s use.
Customization and Rebranding
Most resellers are into white label software reselling, meaning that they rebrand the software with their company’s logo and design. Of course, there is more to changing logos. The resellers will make changes within the user interface, add or remove features, and sometimes even modify the code in their effort to make the software more suitable for their customers. This will, therefore, make the software appear to be generated by the reseller, though originally developed by a third-party vendor.
Reselling to Customers
Once the software is ready, resellers market and sell the product to businesses and end-users. This is usually under the reseller’s brand if it is a white label software reseller setup or part of a broader software reseller program. The resellers can also customize the software to meet their clients’ needs and provide packages for their clients to select.
Recurring Revenue Model
The biggest advantage to selling software, and especially offering software as a service reseller agreement, is that an agreement provides a constant flow of income.
The majority of reseller software products use a subscription model, which enables resellers to be paid monthly or annually.
Types of Software Reseller Models
Businesses have a variety of software reseller models to choose from, depending on their target audience, industry focus, and business goals. Each model offers different opportunities for resellers to add value and cater to their clients’ needs. Here’s a more detailed breakdown of the main types of software reseller programs:
- Custom Software Reseller Program
It’s more about selling customized software solutions to clients for specific business needs. A reseller may adjust some features, add modules, or reintegrate applications within other systems to fit the client’s needs. This might come in the form of enterprise invoicing, CRM, or ERP tools. Flexibility within the model lets a company sell more personalized solutions, commanding higher prices because of their tailored nature.
- Value Added Reseller Software
A value-added reseller software program refers to the addition of more services to an already existing software product in order to enhance its value. These added services might include customization, training, technical support, and even integration with other platforms.
Application VARs would, in turn, sell to business customers whose needs go beyond the software itself and who need a general solution to suit their operations. One such case of value addition is a reseller that takes an out-of-the-box CRM platform and develops customization for vertical markets in health care or retail by offering more complete solutions.
- White Label Software Reseller
In this approach, the reseller has the potential to rename the software. White label software resellers purchase the rights to the software from the vendor, rebrand it with their own logo, coloring, and company name, and then sell the software as if they developed it themselves.
This model has proved extremely useful for enterprises wanting to maintain brand coherence while offering a wide range of products. It eliminates the need for in-house development while enabling companies to keep full control over customer relationships and brand identity.
- Software Developer Reseller Program
Resellers and software developers work together in this approach to marketing specialized software tools, such as development frameworks, APIs, and other components aimed at developers or companies. This program is typical in tech-driven sectors, where companies may need to give their clients specific tools.
Utilizing a software developer reseller program allows resellers to concentrate on offering technical know-how in addition to software solutions, assisting companies in implementing cutting-edge development tools.
- SaaS Reseller Types
Businesses that provide cloud-based, subscription-based services can choose from a variety of SaaS reseller models. Normally, such resellers focus on the sale of software solutions as a service whereby the end customer pays a monthly or yearly subscription to use the program. Common types of SaaS resellers include:
Independent Consultants: Independent resellers are resellers who work independently as consultants. They offer software solutions to small enterprises or certain sectors as third-party consultants. They usually work one-on-one with customers, guiding them in selecting and implementing the best SaaS technologies.
Value-Added Resellers: Similar to the general VAR model, SaaS VARs add extra value through services like software customization, integration, and training, but with a focus on subscription-based software. For example, they might help a business implement a SaaS-based marketing automation platform by integrating it with their existing CRM system.
Managed Service Providers: MSPs offer comprehensive SaaS solutions, from setup to ongoing management and support. Many businesses that need IT support but want to avoid dealing with managing their software systems in-house often find them very attractive. The use of MSPs is quite common in industries like healthcare and finance, where the management of sensitive data becomes quite prime.
System Integrators: These resellers specialize in integrating numerous software solutions into one cohesive system. They work with organizations that use several SaaS products and need support in integrating them. In context, examples of such solutions that a system integrator can incorporate into one integrated system include HR software, payroll tools, and CRM systems.
Pros and Cons of the Software Reseller Model
Before jumping into the software reseller business, it’s essential to weigh its benefits and potential drawbacks:
Pros:
- Low Costs of Development: Resellers do not have to invest in software development; thus, they save time and resources. Instead, all efforts can be concentrated on selling already-made solutions.
- Faster Time to Market: With the help of software vendors, resellers can take solutions to market almost immediately without a drawn-out development process.
- Recurring Revenue: Most of the software reseller programs come for subscriptions; thus, resellers will get a stream of income continuously.
- Customization and Branding: Many resellers have options to customize the software or even sell as white label software resellers, which gives them complete control over the branding and relationships with clients.
- Access to Support: The reseller gets support from the vendor in terms of infrastructure to manage customer queries and technical help.
Cons:
- Vendor Dependency: Resellers rely on vendors for product updates, security patches, and ongoing support. If the vendor underperforms, it could negatively impact the reseller’s business.
- Limited Customization: While some resellers can customize software, others are limited by the software vendor’s constraints.
- Thin Profit Margins: Depending on the terms of the software reseller agreement, resellers may face narrow profit margins, particularly in competitive markets.
- Licensing and Legal Issues: Navigating software reseller contracts can be complex. Resellers need to understand the terms around licensing, pricing, and legal obligations.
Is PureVPN a Software Reseller?
PureVPN, a leading name in the cybersecurity industry, may not fit the traditional definition of a software reset. Still, it offers a highly competitive VPN reseller program that shares many characteristics with software reselling models. This program allows businesses to resell PureVPN’s services, either as white label software or as part of a customized package tailored to their customers’ needs.
The PureVPN reseller program stands out because it combines elements of the white label software reseller and value-added reseller software models. While providing a chilled user experience, businesses could white label the VPN service in their name without hassle for their brand.
Additionally, businesses that join the PureVPN reseller program are required to sign a SaaS reseller agreement based on a mutually worked-out modal of the partnership that includes price structures, revenue-sharing agreements, and technical support. This guarantees a great deal of transparency and consistency so that the resellers can safely offer reliable VPN services, knowing that PureVPN’s infrastructure and experience are entirely supporting them.
For businesses looking to resell software in the rapidly expanding cybersecurity field, the program offers low-barrier access to the VPN market. It offers all the tools and support needed to provide a comprehensive and profitable solution for the client.
Conclusion
The software reseller business model offers a powerful way for businesses to expand their offerings without the need to develop software in-house. Whether you’re exploring custom software reseller programs, value-added reseller software, or white label software resellers, there’s a model suited for every business type.
Even so, the success of any software reseller business is based on developing good vendor relations, truly understanding the needs of your clients, and making sure you add value beyond the simple reselling of software. With the right strategy in place, resellers can create a successful business by offering innovative software solutions while leveraging a vendor’s expertise and infrastructure.
In cybersecurity, PureVPN’s VPN Reseller Program presents a ready-made solution whereby businesses can sell top-tier VPN services without the complications entailed by building one from scratch. Whether entering the software industry or expanding existing offerings, the software reseller business model offers giant strides in both dimensions.