Value Added Reseller Definition Example Benefits Of Var

Value Added Reseller Definition

Explanation

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Characteristics

A value-added reseller is considered an expert in their field, as they provide exceptionally well-designed technical solutions customized as per the business requirement.Since these resellers are best found in the IT industry, they do not have much to do with manufacturing or producing any products. Rather, they are well-versed with hardware and software installation, maintenance, testing, etc.Some VARs are designated to any individual company. At the same time, some carry several brands under their hood, but to increase sales through this medium, most companies offer these resellers an attractive discount on the products.

Example of Value-Added Reseller

Let us consider the most renowned tech giant Infosys, which produces hardware and software solutions for large businesses as per their needs and requirements. However, the products ought to become obsolete quickly with fast-changing technology.So, as a company, when Infosys designs a product, there are a lot of failures, costs, and research involved in its development. The company cannot incur such high charges and analyses with every upcoming tech advancement.So, to resolve this issue, the company builds a reseller network where it trains them to resell the old programs by bundling them with new services and reselling them to other businesses. Effective training and workshops are conducted to maintain a quality standard of Infosys, and thorough knowledge is parted onto the reseller to make an efficient sale. As a result, it will increase its durability and enhance its value.

Value Added Reseller vs Managed Service

Managed service is a subset of Value-Added Resellers (VAR), where they provide one of the services offered by the VAR. A VAR typically tries to resell the product, and the managed service provider has an annual agreement to maintain the installed software.Due to the increasing competition and narrow margins, VAR has shifted its business to offer managed service as a product to the end consumer.A managed service provider proactively takes care of the software by signing a service level agreement or annual maintenance contract with periodic scans and checks.

Benefits

Due to the advancement in technology organizations, it is not easy to design complex IT products and at the same time take care of their reselling. So here is the window for VAR where corporations save themselves from investing more time and resources in making a sale of those products.VAR becomes a subject matter expert, which is essential to strike any deal and gain the buyer’s confidence since they have a specific portfolio of the product offering and learn from the respective company’s training workshops that eventually make them scholars in the products they are selling.They are considered trustworthy for any technical advisory needed in business-related products with qualified knowledge and industry contacts.

Limitations

Since they are the only point of contact between the companies and the end-user, they cannot take advantage of the market and operate on narrow margins. Another reason for limited profitabilityProfitabilityProfitability refers to a company’s ability to generate revenue and maximize profit above its expenditure and operational costs. It is measured using specific ratios such as gross profit margin, EBITDA, and net profit margin. It aids investors in analyzing the company’s performance.read more is that they must maintain the cap and floor price assigned by the company to avoid any exploitation and preserve the brand goodwill in the market.There are thousands of products to resell, and there are multiple resellers. These resellers are easily replaceable; there is no guarantee of a stable career or income, as some might have specific sales targets to achieve.There is frequent change in technology. A reseller must constantly stay updated to compete.

Conclusion

Value-Added Reseller (VAR) is at the right spot in the market, enhancing value for the consumers. At the same time, generating revenueRevenueRevenue is the amount of money that a business can earn in its normal course of business by selling its goods and services. In the case of the federal government, it refers to the total amount of income generated from taxes, which remains unfiltered from any deductions.read more for the corporates, the skills and knowledge they develop are completely product specific and irreplaceable in the due process. Considering the advantages and limitations of being a VAR is rewarding and challenging.