I'm in a unique position that has allowed me to learn something that most might not be able to. That is, how few people understand what white label software is and how a business can be formed around it.
What is white label software?
White label software is software that is developed by a vendor who gives you the ability tot brand the software as your own and sell it or access to it to other people/businesses. For example, let's assume that Spotify was white label software. If your name was Jimmy, you would then brand the software as Jimmy's Online Music. Spotify would provide you with with the tools to manage customers, basic support questions, and potentially pricing. In return, Spotify may require you to pay them for a flat fee upfront, a monthly fee, commission on each sale you make, or a combination of these things.
Depending on the white label software, you may be able to modify the price as you see fit. You can market it where you want, how you want, and will own the brand that you create for it. The company who has developed the software would be responsible for everything on the technical end, including security, enhancements, and bug fixes.
What is good about white label software?
It allows you to own a tech company without needing to know anything about code. It puts the onus of product development, enhancements, technical support, and bug fixes on a third party so that you can focus your time on other functions that your business requires, such as marketing, accounting, finance, etc.
It allows you to start your company today as the product has already been built and tested.
While some white label software serve as stand alone businesses, some cater to business that are already established in their space. These seek to provide your existing clients with professional software that will boost the reputation of your brand.
What is bad about white label software?
While initial investment can be low, you'll earn lower margins on your software sales if you're required to pay the developer commission on each sale.
While some vendors are receptive to change and enhancement requests, not all are. If you want to start a white label software business, understand the product that you are buying into, the level of quality it represents, and the vendor's willingness to implement new features. Some vendors are highly flexible and will work with you to implement features in hours or days whereas others will reject such requests.
In theory, if enough people purchased the same white label software, they're would be competition amongst individuals with a homogenous product. Given the number of white label companies, resellers, and the large population that can be marketed to, the risk of consumers seeing ads for the same white label product (just branded differently) are low.
An example of white label software in action
Do my clients need to know that my software is white label software?
No. So long as you're offering good support and are reselling a piece of quality software for a reasonable price, most businesses or people will not care that you aren't the one who wrote the code.
Ways to differentiate your product
Even though your white label software is the same as another reseller's, there is still opportunity for differentiation in:
- How you brand the product
- How you market the software and who you market it to
- How you interact with and get feedback from your clients (which can be relayed on to the developer)
- The level of support that you offer clients
- Other ways you add value for your customers (i.e. mailing list with articles that would benefit them, find complementary white label software and bundle as a package, etc). This is where you can get creative.
Flexibility in marketing
How you generate sales with a white label software business is entirely up to you. You can do PPC ad campaigns, email campaigns, Youtube ads, print ads, door to door sales (for B2B software) or cold/warm calling campaigns. At the end of the day, some of these cost money and others are virtually free. Your budget and your willingness to interact with people will dictate which option you go with. Marketing is going to take up a lot of your time and/or budget. If you want to run a white label software company, you need to be comfortable with the idea of learning about marketing (Youtube has all you need to know), metrics, and talking to people. If you want to run a tech company, but don't want to talk to anyone, I can assure you that this business model isn't for you.
Why white label software?
Today, there are a lot of people out of work and a lot of people trying to figure out what they are interested in, what they are good at, what they can afford to start, and and what the market needs. As someone who has never started a business, and even for some who have, this is a challenging task. In addition to service based businesses, I'd recommend that people give white label software a look. It's not for everyone, but I think it is for some people. Unfortunately, given how little it is talked about, I believe that many of those people for whom it would be a good fit do not know that it exists.
If you have any questions, feel free to let me know. I've currently involved in the white label software industry and will be able to help out with questions.
Have a great Monday!