The Lowdown
What is Original Design Manufacturing?
What labeling is a business model that takes existing software or services from software development firms or service providers and branding it as your own. You might have heard of private labeling so I want to clear up the confusion up front. In our context, we differentiate white label as a software or service based product vs. private label which is physical products based.
Software Products and Services
Software and service-based companies also provide white labeling services. This means you could build a company purely from white-labeled software and services creating a full suite of offerings without producing a single line of code or hiring a single employee. They allow resellers to market their products under the guise of your own brand.
That means you could be a digital marketing agency that provides SEO, social media management, and content creation services without actually knowing how to do any of it. You can also offer subscription-based software to your customers that fit your business niche. If you were a blogger and you blogged about personal finances, you could offer personal financial software branded as your own product, adding value to your customers and increasing your company's offering and brand image.
Examples of White Labeling Software & Services
- Hosting
- Marketing Software
- Sales Software
- Lead Generation Software
- Finance Software
- Logistics Software
- Writing
- Data Management
- Delivery
- Customer Service
- Advertising Strategy
- Website Development
- App Development
- Social Media Management
- Review management
There are many companies that manufacture products or develop software that allows you to use your brand on their products. Now the question you might be asking is, "Why would a company do that?" The short answer is that manufacturers and some software companies are in the business of creating products for other businesses (B2B) rather than marketing it to consumers (B2C) themselves. This allows them to focus on servicing several businesses that do large order volumes or buy high ticket products rather than hundreds to millions of individual consumers. Their core competency is manufacturing, software development, or services and not branding and marketing to retail consumers.
How Does it Work?
How Do You Make Money?
Software & Services
Most companies that provide white labeling services on their software products or services tend to have a monthly or yearly purchase price. If you're able to successfully sell the services or products, you get to keep the difference.
Many software solutions are subscription-based and are charged on a monthly basis to your customers. This could be a great way to generate reoccurring revenue for your business. Services tend to be percentage split between the service provider and the reseller.
What Are The Pros & Cons?
- Quick to market
- Relatively low minimum order quantity
- Control over the customer experience
- Decent margins
- Low initial product cost
- Little product differentiation from other resellers
- Harder to build a unique brand with generic products
- Little control of product quality
- Little control over product design
Estimated Startup Cost
Startup costs for software or service-based white label business vary greatly. It depends on what products you want to offer and how many of them. White label software products are usually charged monthly or annually, depending on the companies pricing model. They can range from a couple hundred a month to $1,000+ a month.
Purchase Order (MOQ)
Hosting
Samples
Website Theme
Software
Branding
Domain
Total Cost
Key Activities of Original Design Manufacturing
alIf you plan to start a business with white labeling software and services, the key is finding products and services that meet your business niche. You'll initially spend time finding white label products that meet your standards. Once you've established your product offerings, you'll transition to marketing, sales, and customer service. Also, if you offer white labeling services, make sure you're aware of how much the white labeling company will do and what you're role is in the post-sale process. Some companies are full service while some only do partial service.
Start Original Design Manufacturing
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