Author: Dave Norwood
There are many resellers out there. However, there are far fewer VARs (Value Added Resellers). The important difference is how much value the reseller adds to the equation. There are poor sales persons/companies who call themselves “VARs” but add little or no value, they only add to the cost of goods. These are the people who give the term “middle man” its bad name. On the opposite end is a true VAR. They are the middle man that performs a valuable function, the gathering and sharing of valuable information. The VAR does research on technologies and methods (which takes time and money). The knowledge gained is valuable but comes at a cost (again, time and money). The idea is that “cost” is spread out over many customers. I do the research once, and share that information with multiple companies, much more efficient (and less expensive) than each company doing that research themselves.
A problem can arise when customers don’t realize that there is a cost associated in gathering that important and valuable information. Too many people believe that information is free and hence, the services of the “middle man” should be free. They have forgotten how long it took them when they’ve had to do research on their own. Once more, time is money. This problem can put a VAR out of business. If customers solely use the VAR for information, and buy the solution from the cheapest Internet vendor, the VAR never recoups the cost of doing the research and educating the customers.
The crazy thing is, the VAR is usually very close in price, yet the customer puts zero dollars of value on the information, so the cheap internet vendor wins anyway. If I’m given the “right of first refusal” I can almost always get the manufacturer to give me better pricing to match or beat the internet reseller. The manufacturer knows who did the work and will reward that if they are made aware of a conflict. Then the customer gets the best price possible from the local VAR who did the work, everyone wins.
If my pricing is ever out of line, please don’t be shy, let me know. Most times we find it is not apples-to-apples or the manufacturer will offer additional discount so we can match or even beat the internet reseller. As a recap: Poor Sales Person- adds little or no value (order taker) yet increases the cost of the goods. Poor Customer- ignores the value a true VAR offers, just uses the VAR and then buys from the cheapest source without first giving the VAR first right of refusal (benefiting from the VAR’s information but unwilling to pay for it). Good Sales Person- offers value to the customer with product knowledge and general expertise. The small (if any) increase in price of the goods is more than covered by the value of the information offered (time saved by the customer from not doing their own research). Good Customer- looks at total transaction costs (cost of finding the solution and the cost of the actual goods). A simple solution, such as a printer or computer monitor, does not require the expertise of a VAR, they just buy from the cheapest source. On more complex solutions they make a choice, do the research themselves and buy cheap, or use a VAR and buy inexpensive (cost of own research + goods > cost of goods + research from VAR). In general, this is how I view my industry. I don’t charge for my time, but I do ask that my customers appreciate and value the services I provide… just as I greatly appreciate their business.