December 16th, 2010 by Stephanie Duesing
Thinking about offering your product as a white label?
Wondering what the benefits and risks are?
Many digital product companies use white labeling as a major component of their business strategy – but what does it really entail and what’s best way to get started?
Of course every company is different, but we’ve talked to some experts who can help you figure out which strategy is best for your business.
Software developers SPAMfighter and TemplateZone have both found success by offering white label products – and have done so using distinctive tactics.
SPAMfighter provides computer and server security products to more than 20 million users in 227 countries around the globe. They not only create products they sell all over the world, but also offer these products to other companies as white label and SDK (Software Development Kit) solutions. Their white label solution is more common because it requires few resources from partners, and implementation is much quicker.
SPAMfighter takes a comprehensive approach to their white label strategy. SPAMfighter provides everything a company needs to market and sell their white label products. SPAMfighter offers their top-selling solutions fully rebranded with logos, graphics and text together with real-time reporting and valuable resources.
“We are a one-stop shop,” said Lori Fraijo Raygoza, SPAMfighter managing director, North America. “SPAMfighter customizes every program to fit their partners’ needs. From design and marketing and a dedicated account team to help optimize downloads and convert sales after launch, SPAMfighter gives clients all of the tools they need to easily diversify their product portfolio.”
SPAMfighter makes it easy for partners to get started, and time to market is less than 30 days. They charge a flat licensing fee on each white label product sold. SPAMfighter knows what they’re doing – their products just hit 10 million unique downloads.
“Most of our clients are looking to supplement their existing products,” Raygoza said. “They have momentum, traffic and a loyal customer base. Monetizing a current customer base will bring the most success, and introducing customers to new products provides more value for them. When you wrap your brand around solid products like those provided by SPAMfighter, it’s a win-win.”
So why is rebranding such an integral part of SPAMfighter’s business strategy? The process is imperative to their technology development and international growth. “The more users we have, the more feedback we get, the more we can improve our products,” Raygoza said. “We don’t see this as competition – we see it as expanding our worldwide reach.”
TemplateZone uses a different method to white label their products, which include templates and tools software for MS Office, Excel and Word. TemplateZone’s core competency is developing editing tools and great-looking designs.
TemplateZone works with OEM partners such as Kodak and HP to create rebranded software that comes with the equipment at purchase. For example, Kodak includes a white label version of TemplateZone’s “OfficeReady” software along with their ESP Office 6150 All-in-One printer.
TemplateZone also provides white label software to platform manufacturers, such as email service providers (ESPs) like MailChimp and ExactTarget and many others. These ESPs seamlessly integrate TemplateZone’s designer templates and powerful editing tools as a part of their e-mail marketing offerings.
“While our white label clients could create a similar solution, the cost of our solution is far less and the success is predictable,” says TemplateZone CEO Jim Kinlan. “A wide adoption of usage among our white label clients should help us sell our end-user product. An OEM strategy or ‘white label strategy’ has always been an integral part of our product adoption. As we move now toward a SaaS product offering, this residual revenue model will become important for both end users and white label partners.”
When a product is a component of a larger solution it may make more sense to charge a licensing fee rather than a per-use fee.
Different from SPAMfighter’s pay-per-sale strategy, TemplateZone business model is to charge an annual license fee as well as upfront development and maintenance costs. Their customers’ clients then have unlimited access to the product. “Our clients want to have predictability and be able to offer our white label solution to all of their customers without regard,” Kinlan says. “Just as predictable success and low cost is important to our customers, the predictable flow of revenue from white label helps us cover our costs with end user marketing. Our close relationship with these core customers also helps us by guiding new product features and trends.”
White label products can mean booming businesses. Over the next 18 months, TemplateZone estimates that 40 percent of their revenue will come from white label customers.
Keystone: If you’re interested in offering your products as white labels, you should take the time to design a strategy that’s best for your products and your company.
Some questions to think about when you are considering a white label strategy…
- What is your core competency? Is your company proficient in technology or sales and marketing?
- How much control do you want to have over your products? Are you willing to trust someone else with the distribution and marketing of your products?
- Relationships with partners are an integral part of a white label strategy. How many resources do you have to designate to a white label strategy?
- How much extra effort will it take to develop a product that can be easily branded for your partner with no indicator back to your brand? Moreover, you should try to discover if certain customers might require modifications and how you will maintain these different code sources.
Do you have a white-label product or are you white labeling your product? What level of success have you had? Are there similar white label models of distribution that we did not cover?