White-label software lets you offer applications to your clients without the trouble and expense of developing the software yourself. The software is created by another company and you resell it under your company’s name as your own product.
Depending on the supplier, you can purchase a yearly license or pay a monthly subscription for the software you resell, but either way, the principle is the same. You’re contracting for unbranded software that you can offer clients at a price you choose and under your brand.
White-label software is a blank canvas, a finished product ready to be branded and customized to fit your company’s needs.
Why companies choose white-label software
The white-label concept isn’t unique to the software business or the 21st century. For centuries, companies have sought to balance the benefits of making versus buying. Should you hire a marketing staff or contract with consultants? Build a factory or send your designs to an offshore manufacturer? Build your website from scratch or use an established platform like WordPress?
Cost and competence
In the software business, the make-versus-buy decision often rests upon two crucial elements: cost and competence.
Software development is notoriously expensive, especially when deadlines are tight. So you must compare the cost of developing software in-house with the cost of licensing apps from a white-label vendor. With the SaaS model of incremental monthly payments, the white-label solution’s initial cost is much lower because you can pay as you go without making a big initial investment. Of course, you must build the white-label software’s licensing cost into your selling price, which can limit your margins.
That’s the cost issue. When it comes to competence, you must ask yourself a simple question: Do you have within your company the core competence and capacity to develop new software? Most agencies have lots of people who are good at marketing and sales, but not too many software developers.
That’s why it makes sense to do what you do best and count on your white-label vendor to do the same.
The benefits of white-label software
Once you’ve addressed cost and competence, it’s time to consider important benefits of white-label software:
- Quick time to market. Choosing the right white-label solution significantly cuts your time to market, making you more competitive. You don’t have to wait months or years for the software to be developed. Any white-label platform can be used almost instantly. Just need to add your branding and start selling.
- Low barrier to entry. If you are aiming to enter a new market or industry niche, white-label software can get you there faster. The initial cost is low since you pay a monthly fee and the vendor provides the know-how.
- Easy to scale. You don’t have to worry about scaling the business. Just focus on sales. White-label software is built to withstand high usage, and it’s already field-tested.
- Diversify your offerings. Whether you want to respond to client requests or upsell and retain them by diversifying your offerings, the white-label approach is the quickest and most cost-effective solution.
- Jump over the learning curve. Leverage your vendor’s knowledge and bypass all the extra effort that would be required if you were to develop your own solution.
- No maintenance costs. If you develop software in-house, you must put in the work and cost to maintain the software and update it periodically. Good white-label providers are constantly rolling out new features, fixing bugs, and adapting to new platforms so you can provide seamless service to clients.
Find a partner, not just a supplier
Branding is the key component of the white-label solution. You are selling the software as your own, so your customers should see only your brand. Make sure the software you choose is completely customizable.
White labeling may be the easiest and fastest way to add a new product or service to your company’s offerings, but you won’t enjoy all the potential benefits if you choose the wrong vendor - and if the software is buggy or poorly designed, it could harm your reputation.
That’s why it’s important to consider white labeling a long-term business relationship that extends beyond the product. Here are some questions to consider as you choose a product and vendor.
Does the new product offer real value to customers?
Before you choose to resell a product, subject it to thorough testing. Take a step back and think about your target audience. Is this a product that will solve their specific problems?
Even if you don’t yet have any customers, think about your niche. The time you invest in researching the market and its needs will pay off when you choose a white-label product that is a good fit for your audience.
Does it complement your current offerings?
Estimate the overlap between your current customers and the customers who would use the product you are adding. Even if the overlap isn’t big, you can make a strategic decision to use the new product to branch out into other industries.
Is the software easy to use?
Most of your clients are unlikely to be software experts. The product you are white labeling must deliver a great user experience. Good documentation and an intuitive interface go a long way when people use the software for the first time.
What is the vendor’s reputation?
This is a long-term partnership. You need to trust your vendor and build up some rapport. Your success is also the vendor’s success, so make sure you find a company that recognizes that will go the extra mile to support you.
How good is vendor support?
You depend on your vendor’s support team when bugs and glitches arise. Responsive, helpful, easily available support will help you provide better service to your clients, so this isn’t something you should lightly disregard.
A knowledge base or FAQ list that you can share with customers will surely come in handy. Instead of producing the content on your own, you can use these white-label resources to speed and ease onboarding for your clients.
Is there a lock-in period?
For maximum flexibility, it’s best to choose a white-label provider whose contracts don’t require you to make a long-term commitment. This will allow you to back out if you’re not satisfied. Of course, you may get a lower price if you make a longer commitment, and you need to take that into account. Do the math and see what works best for you.
White-label business examples
There are lots of ways to add white-label software to your company’s offerings. Here are some of the most common cases.
Many agencies opt for white-label software to expand their offerings - and for good reason.
This is a good solution if your core competence doesn’t include software development. Instead of investing time and money in staffing and training a team of developers, you can choose an established partner and use an existing product.
The white-label approach also lets you respond to the market more quickly. That’s a key benefit. If your current clients are satisfied with your services, they will often look for ways to outsource even more tasks to your team. White-label software allows you to do more business with clients who are already happy with your work.
Software as a service model
You don’t have to fold the white-label software into an existing business. You can form a company just to sell the product to users if you prefer. In this scenario, your focus is on inbound sales and brand awareness for your branded product. Your job is to sell the product and onboard users so they can use it on their own.
Reselling white-label software
If your white-label vendor’s contract allows it, you can even resell the software to other businesses who resell it on a white-label basis. You can customize the white-label software as your own and resell it as a white-label solution. That might sound like something from the movie Inception, but many businesses use this model and it works perfectly for them.