What is a value added reseller? Definition, models, and examples

What Is a Value Added Reseller?

A value added reseller (VAR) is a company that purchases a product from a manufacturer or distributor, enhances it with additional features, services, or integrations, and sells the combined offering to end customers. The "value added" part is what distinguishes a VAR from a simple reseller: VARs do not just mark up and resell a product. They make it more useful before it reaches the buyer.

In technology, a VAR might take a cloud platform, configure it for a specific industry, bundle it with training and implementation services, and sell the complete package to businesses in that vertical. The end customer gets a solution tailored to their needs instead of a generic product they have to customize themselves.

VARs operate across industries, but the model is most common in IT, software, telecommunications, and manufacturing. They serve as a bridge between the company that builds the product and the customer who uses it, absorbing the complexity that the manufacturer cannot or does not want to handle directly.

How the VAR Model Works

The VAR business model follows a consistent pattern regardless of the industry.

Sourcing the base product

The VAR establishes a partnership with a manufacturer, software vendor, or distributor. This partnership typically comes with negotiated pricing, deal registration, co-marketing support, and access to technical resources. The VAR buys the product at a wholesale or partner price.

Adding value

This is where the model gets its name. The VAR enhances the product in one or more ways:

- Configuration and customization. Adapting the product to fit a specific use case, industry, or customer requirement.

- Integration. Connecting the product with other systems the customer already uses.

- Bundling. Packaging the product with complementary products, services, or support to create a complete solution.

- Training and support. Providing onboarding, ongoing training, and technical support that the manufacturer does not offer directly.

- Consulting. Advising the customer on how to deploy and optimize the product within their specific environment.

Selling to end customers

The VAR sells the enhanced product to the end customer, usually at a price that reflects the added value. The customer may interact primarily with the VAR rather than the manufacturer, especially for support and ongoing services.

Ongoing relationship

Many VARs maintain long-term relationships with their customers through managed services, maintenance contracts, or recurring support agreements. This recurring revenue is often more valuable than the initial product sale.

VAR vs. Distributor vs. Reseller

These three terms get confused frequently, but they describe distinct roles in the sales channel.

Reseller

A reseller buys a product and sells it without modification. They may provide customer service or logistics, but they do not change the product itself. Think of a retail electronics store: they stock laptops from multiple manufacturers and sell them as-is.

Distributor

A distributor buys products in bulk from manufacturers and sells them to resellers or VARs. Distributors handle logistics, warehousing, and sometimes financing. They rarely sell directly to end customers.

Value added reseller

A VAR buys from manufacturers or distributors and adds meaningful value before selling to end customers. The value can be technical (custom integrations), service-based (training and support), or strategic (consulting and implementation planning).

The key distinction: resellers move products, distributors move volume, and VARs solve problems.

Why Companies Work with VARs

For manufacturers

Manufacturers cannot serve every customer segment directly. A software company with a horizontal product may not have the industry expertise, local presence, or support capacity to address vertical markets. VARs fill these gaps.

Working with VARs extends the manufacturer's reach without the cost of building direct sales teams for every segment. The manufacturer handles product development, and VARs handle the last mile of sales, customization, and support.

For end customers

Customers benefit from working with a VAR because they get a solution, not a component. Instead of buying software and then hiring a consultant to configure it, training their team, and integrating it with existing systems, they get all of that from one provider.

VARs also tend to have deep expertise in specific industries or use cases. A healthcare-focused VAR understands HIPAA compliance, EHR integrations, and clinical workflows in ways that a general-purpose software vendor does not.

For VARs themselves

The VAR model creates multiple revenue streams: product margins, implementation fees, training revenue, managed services, and renewal commissions. The recurring service component provides stability that pure product reselling lacks. Understanding concepts like high-ticket sales is valuable for VARs, since many VAR deals involve significant contract values with extended sales cycles.

Examples of Value Added Resellers

IT and cybersecurity VARs

An IT VAR might partner with a firewall manufacturer, combine the hardware with a managed security monitoring service, add network configuration, and sell the package to small and mid-size businesses that lack in-house IT security teams.

SaaS and cloud VARs

A cloud VAR might take a CRM platform, build custom integrations for a specific industry like real estate or logistics, train the customer's team, and manage the ongoing optimization. The customer gets a CRM that works for their workflow on day one.

Telecommunications VARs

A telecom VAR might bundle internet service with VoIP phone systems, unified communications platforms, and ongoing support. The customer gets one provider instead of three, and the VAR handles the integration between systems.

Challenges of the VAR Model

Margin pressure

As manufacturers invest in direct sales channels and subscription pricing models, VAR margins on product sales are shrinking. VARs increasingly depend on services revenue to maintain profitability, which requires different skills and operations than product reselling.

Dependence on vendor partnerships

A VAR's business depends on the stability and generosity of its vendor relationships. If a vendor changes its partner program, reduces margins, or starts selling directly to the VAR's customers, the impact can be immediate and significant.

Evolving customer expectations

End customers increasingly expect the self-service convenience of buying directly from vendors. VARs must continuously demonstrate that their added value justifies the engagement. Generic reselling without genuine enhancement is becoming less viable. Effective outreach to prospects requires the same attention to personalization. Our guide on whether cold emailing works explains why generic messages fail in a world where buyers expect relevance.

Keeping up with technology

In technology markets, VARs must stay current with the products they sell. Certifications, training, and technical skills require ongoing investment. A VAR that falls behind on product knowledge loses credibility with both vendors and customers.

FAQ

Is a VAR the same as a managed service provider?

Not exactly. A managed service provider (MSP) delivers ongoing IT services, usually on a subscription basis. A VAR sells enhanced products with services attached. Many VARs have evolved into MSPs over time, blending product reselling with recurring managed services, but the terms describe different primary functions.

How do VARs make money?

VARs earn revenue from the margin on product sales, implementation and configuration fees, training charges, ongoing support contracts, and managed service subscriptions. The most successful VARs derive the majority of their revenue from services rather than product margins.

Do VARs exist in SaaS?

Yes. SaaS VARs typically add value through implementation, customization, integration with other tools, and ongoing optimization. The product itself is a subscription, so the VAR's value comes from making the software work for the customer's specific needs rather than from the product margin.

How do I become a VAR?

Most manufacturers have partner programs with defined tiers and requirements. Typically, you apply to the program, meet technical certification requirements, agree to sales and support commitments, and gain access to partner pricing and resources. Start with one vendor in an area where you have genuine expertise.