The Value Added Reseller (VAR) model allows entrepreneurs with specialized knowledge to enter the marketplace without building a product from scratch. A VAR enhances existing products with their expertise, transforming a standard item into a comprehensive solution. By focusing on service and customization, a VAR can build a sustainable business centered on delivering targeted solutions for specific industries.
What is a Value Added Reseller?
A Value Added Reseller is a company that purchases products from a distributor or manufacturer, adds its own services or features, and then sells the combined package to an end customer. This “value-add” is the main differentiator between a VAR and a standard retailer. Instead of simply moving boxes, a VAR creates a complete offering designed to solve a specific client problem. The added value can come in many forms, including software installation, system integration, training, and ongoing technical support.
For instance, a business might purchase high-performance computer hardware from a major manufacturer. As a VAR, that business would bundle them with pre-configured industry-specific software, provide on-site installation and network integration, and train the client’s staff. This approach turns a simple hardware sale into a full-service IT solution.
Identifying Your Niche and Value Proposition
The first step to success as a VAR is identifying a niche, which is a specialized market where your expertise provides a distinct advantage. This focus allows you to develop a strong reputation and deep understanding of your target customers’ challenges. Your niche could be defined by a particular industry like healthcare, a specific company size, or a geographical location.
Once your niche is defined, formulate a clear value proposition, which is the specific bundle of services you will add to the core product. Think about what problems your target customer faces and how your expertise can solve them. Your value-add might include consulting, product customization to fit a client’s workflow, or training to ensure their team can use the new tools effectively.
For example, if you have a background in architectural design, you could become a VAR for 3D modeling software. Your value proposition would be the expert training, custom template creation, and integration support you provide to architecture firms. This targeted approach makes it easier to find and convince potential customers.
Establishing Your Business Foundation
With a clear niche and value proposition, the next phase involves creating the legal and administrative framework for your company. This begins with selecting a business structure, which has long-term implications for liability and taxation. Common options include a sole proprietorship or a Limited Liability Company (LLC), which separates your personal assets from business debts.
After choosing a structure and registering your business name, you must obtain an Employer Identification Number (EIN) from the IRS for banking, hiring, and taxes. You will also need to secure the necessary state and local business licenses to operate legally. A reseller permit, also known as a resale certificate, is necessary to purchase products from distributors without paying sales tax, as the tax will be collected from the end customer.
Building Supplier and Partner Relationships
Securing a reliable supply of products is part of the VAR model. This involves identifying and vetting Original Equipment Manufacturers (OEMs) or distributors whose products align with your niche. Your research should extend beyond the product to the company’s reputation, market position, and its channel partner program, which defines the rules for resellers and provides support.
When you find potential partners, have an introductory meeting to ensure your goals align. Inquire about their partner program’s requirements, such as sales volume commitments or technical certification prerequisites. A good partner offers resources like sales materials, product training, and technical support. Understanding their reseller agreements is also necessary, as these contracts outline your rights, obligations, and payment terms.
A strong, communicative relationship is a strategic asset. Provide partners with customer feedback, as your market proximity can offer them valuable insights for their product roadmap. In return, stay informed about their new product functionalities. This collaborative approach helps you consistently offer clients the best possible solutions.
Developing Your Pricing and Sales Strategy
Your pricing strategy must account for both the cost of the original product and the value of your added services. A common approach is to create bundled packages at different tiers, such as basic, recommended, and premium options. A basic package might include the core product with simple installation, while a premium package could offer extensive customization and long-term support. This tiered structure provides clients with flexible options.
When setting prices, analyze your operational costs and the technical expertise required for your services. Some VARs use a monthly recurring revenue (MRR) model, selling services on a subscription basis instead of charging one-time fees. This approach can build a more predictable and stable revenue stream.
Your sales process should be clearly defined, outlining how you will identify and engage potential clients. Since VARs have deep market knowledge, the sales strategy should be consultative. Focus on understanding a client’s problems and demonstrating how your solution addresses them to build trust and position you as an expert advisor.
Launching and Marketing Your VAR Business
With your business structure, supplier relationships, and pricing in place, the final step is to launch and market your services. Your primary marketing tool is a professional website that clearly communicates your value proposition. The site should focus on the integrated solutions you provide, highlighting how you solve specific problems for clients in your niche.
Effective marketing for a VAR relies on demonstrating expertise and building credibility. Develop case studies or gather testimonials from early customers, as these stories provide concrete proof of the value you deliver. Networking within your chosen industry is also important; attend conferences, join professional organizations, and engage in online forums where your target clients are active.
Initial marketing efforts should be targeted and practical. Consider paid advertising on platforms like Google Ads to reach businesses actively searching for solutions you offer. Building an email list and sending newsletters with helpful tips can keep your business top-of-mind. Consistently showcase your specialized knowledge and the benefits of your value-added solution.