Value-added resellers add unique features or components to increase the value of products, allowing retailers to increase profit margins without developing new products. This tactic is used in various industries, such as bundled software, fast food combos, and discounted services.
A value-added reseller is a reseller who engages in a form of business where the value of the products offered for sale is increased by adding unique features or components. By adding more value to existing products, retailers can increase the profit margin for their current product line. The value-added reseller is able to improve its product line without spending huge amounts of time and money developing new products. The reseller adds to this value through added services, features and functions.
The thinking behind this tactic is simple. While the package price might be considered expensive for a single part, adding more components creates greater value. Add-on programs offered by the value-added reseller allow the end user to justify the purchase, because it divides the total cost of the package by the number of products or services included.
In some cases, the tactic of adding value can be used to drive sales for a specific inventory item or professional service. Many manufacturers and service providers offer a discounted price on products or services that don’t meet expected sales. Shoppers can often find these savings opportunities in the form of specials. For example, a mechanic may offer a free tire rotation with an oil change, or a phone company may offer a package that includes Internet, television, and home phone service at a discounted rate.
A common example of a product offered by a value-added reseller is bundled software. While the end user may purchase a particular program, they may be put off by the high price. In many cases, retailers package a variety of games, media, or security software into a set that is then sold to the end user. The value-added reseller makes this software appear to be of greater value by bundling additional software with the package. The reseller can make even more profit, because the person looking for that program ends up paying more for the package than she intended to pay for the individual program.
Another common example of this sales tactic is seen in the fast food industry. When you visit many fast food restaurants, a quick glance at the menu reveals the option to buy certain foods together at a discounted price. These meals usually include a sandwich, side dish, and drink offered at a small discount. As a value-added retailer, the restaurant is banking on the fact that more people will order these combo packages instead of spending money on a single food or drink. This way, the shopper ends up spending more on the combo than they perhaps intended to spend buying just one sandwich.
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