Valued Added Reseller (Var)
A Valued Added Reseller (VAR) integrates additional services or features with existing products to deliver comprehensive, tailored solutions to end-users.
Tumisang Bogwasi
Tumisang Bogwasi
What is Valued Added Reseller (Var)?
A Valued Added Reseller (VAR) is a company that resells existing products, typically technology hardware or software, and integrates them with additional features, services, or complementary products to create a comprehensive solution for end-users. This added value differentiates the VAR from a standard reseller, who merely distributes products without significant customization or service integration. The primary goal of a VAR is to provide a complete solution that addresses specific customer needs, rather than just selling individual components.
VARs typically target specific industries, customer segments, or technological niches, developing expertise that allows them to customize offerings effectively. They often serve as crucial intermediaries between original equipment manufacturers (OEMs) or software vendors and the end customer. This relationship benefits both parties: manufacturers gain extended market reach and specialized deployment, while customers receive tailored systems with ongoing support.
The services added by a VAR can range from installation, configuration, customization, and training to ongoing maintenance, technical support, and even consulting. These services transform a generic product into a bespoke solution, enhancing its utility and perceived value for the customer. This model often involves complex project management and deep technical knowledge.
Definition
A Valued Added Reseller (VAR) is a business that enhances a manufacturer’s existing product or service with additional features, services, or products, then resells the integrated solution to end-users.
Key Takeaways
- VARs sell enhanced versions of original products by adding services or components.
- They provide specialized expertise, integration, and ongoing support beyond simple resale.
- The added value can include installation, configuration, customization, training, and maintenance.
- VARs serve as essential channel partners for manufacturers, extending market reach and providing specialized deployment.
- Their business model focuses on delivering complete, tailored solutions to specific customer needs.
Understanding Valued Added Reseller (Var)
A Valued Added Reseller operates by identifying market gaps or specific customer needs that can be met by combining existing products with proprietary or third-party services. For instance, a software VAR might take a standard accounting package, customize it for a specific industry like healthcare, provide data migration services, and offer ongoing technical support. This comprehensive approach ensures that the customer receives a ready-to-use system.
The “value-added” component is critical and distinguishes a VAR from a mere distributor or retailer. This value often includes specialized industry knowledge, technical integration skills, and customer service. VARs develop deep relationships with both their suppliers and their customers, often becoming trusted advisors. Their business model thrives on delivering solutions that are more convenient, efficient, or effective than if the customer purchased components separately.
VARs often play a significant role in the B2B technology sector, assisting businesses in implementing complex IT solutions. They streamline the procurement and deployment process, acting as a single point of contact for hardware, software, and services. This approach minimizes complexity for the end customer, leading to higher customer satisfaction and often enabling sales that manufacturers might not achieve independently.
Formula (If Applicable)
There is no specific mathematical formula for a Valued Added Reseller (VAR). The concept revolves around enhancing a product’s utility and market value through services. However, the profitability of a VAR can be conceptualized as:
- VAR Profit = (Selling Price of Solution – Cost of Original Product – Cost of Value-Added Services)
This reflects the margin generated from both the base product and the services integrated by the VAR.
Real-World Example
Consider a small business needing a complete office IT setup. Instead of buying computers, networking equipment, operating system licenses, and security software from different vendors, they approach a VAR. The VAR procures the hardware and software, then pre-installs operating systems, configures the network, sets up security protocols, and installs business applications. They might also provide initial employee training and offer a yearly maintenance contract. This bundled solution provides the customer with a fully operational IT infrastructure, complete with support, all from a single vendor.
Importance in Business or Economics
Valued Added Resellers are vital to the business ecosystem, particularly in technology and specialized industries. They facilitate the adoption of complex products by making them accessible and tailored to specific user requirements. For manufacturers, VARs expand market reach, reduce direct sales costs, and often provide localized expertise and support. This allows manufacturers to focus on product development while VARs handle customization and end-user engagement.
Economically, VARs contribute to job creation in technical sales, support, and consulting roles. They enable efficient wholesale distribution channels and foster competition by offering differentiated solutions. By bridging the gap between generic products and specific customer needs, VARs enhance productivity for their clients, stimulate demand generation for technology, and drive innovation through the integration of various offerings. Their role is crucial in ensuring specialized products reach their intended markets effectively.
Types or Variations (If Relevant)
- Vertical VARs: Specialize in specific industries, such as healthcare, finance, or retail, offering highly customized solutions tailored to that sector’s unique regulatory and operational needs.
- Horizontal VARs: Focus on a specific technology or service that spans multiple industries, like cybersecurity solutions, cloud migrations, or enterprise resource planning (ERP) implementations.
- Managed Service Providers (MSPs): Often evolve from or operate as VARs, focusing heavily on providing ongoing management and support for IT infrastructure and applications, typically on a subscription basis.
- System Integrators (SIs): Concentrate on combining different IT systems, software, and hardware components into a unified, functional whole for large organizations, often involving significant custom development.
Related Terms
- Wholesale distribution
- Demand generation
- Market Positioning
- Business Migration
- Organizational development consultant
- Channel Partner
- System Integrator
- Managed Service Provider (MSP)
- Original Equipment Manufacturer (OEM)
Sources and Further Reading
- Investopedia: Value-Added Reseller (VAR)
- Gartner Glossary: Value Added Reseller (VAR)
- Forbes Advisor: What Is a VAR (Value-Added Reseller)?
- TechTarget: What is a value-added reseller (VAR)?
Quick Reference
- Function: Resells products with additional services or features.
- Primary Benefit: Provides comprehensive, tailored solutions to end-users.
- Key Services: Installation, configuration, customization, training, support, integration.
- Typical Sector: Technology, software, hardware.
- Role in Channel: Intermediate link between manufacturer and customer.
- Differentiation: Focus on value creation beyond simple product distribution.
Frequently Asked Questions (FAQs)
What is the primary difference between a VAR and a standard reseller?
The primary difference is that a VAR adds significant value to a product through customization, integration, and services like installation, training, and support, delivering a complete solution. A standard reseller typically just sells the product as-is without these enhancements.
Why do businesses use Value Added Resellers?
Businesses use VARs to gain access to specialized expertise, receive tailored solutions that perfectly fit their needs, and simplify the procurement and deployment of complex technologies. VARs often act as a single point of contact for multiple products and services, streamlining operations.
What kind of “value” does a VAR add?
The “value” added by a VAR can encompass various services, including system design, hardware and software configuration, custom software development, data migration, user training, ongoing technical support, and comprehensive maintenance contracts. These services transform generic products into specific, ready-to-use solutions.
Are Managed Service Providers (MSPs) a type of VAR?
Many Managed Service Providers (MSPs) can be considered a specialized type of VAR. While VARs often focus on one-time solution delivery, MSPs emphasize ongoing management and support of IT infrastructure and applications, typically on a recurring subscription model. However, the core concept of adding value to underlying technology remains consistent.
