Value-added resellers add unique features or services to products to increase their value and profit margins. This tactic is used in various industries, including software, fast food, and professional services. Bundling products or offering discounts can encourage sales and justify higher prices.
A value-added reseller is a reseller that engages in a form of business in which the value of products offered for sale is increased by adding unique functionality or components. By adding more value to existing products, retailers can increase the profit margin of their current product line. The value-added reseller is able to enhance its product line without spending a lot of time and money on new product development. The reseller adds this value through additional services, features and functions.
The thinking behind this tactic is simple. While the package price can be considered expensive for a single part, adding more components creates greater value. Additional programs offered by the value-added reseller allow the end user to justify the purchase by dividing the total cost of the suite by the number of products or services included.
In some cases, the tactic of adding value can be used to encourage sales of a particular stock item or professional service. Many manufacturers and service providers offer a discounted price on products or services that have not achieved their projected sales. Buyers can often find these money-saving opportunities in the form of promotions. For example, an auto mechanic might offer a free tire rotation with an oil change, or a phone company might offer a package that includes Internet, television, and home phone service at a discounted price.
A common example of a product offered by a value-added reseller is bundled software. While the end user may be buying a particular program, he or she may be put off by the high price. In many cases, retailers bundle a variety of games, media, or security software into a bundle that is sold to the end user. The value-added reseller makes this software seem like a greater value by adding extra software to the package. The reseller can make even more profit because the person looking for this program ends up paying more for the package than they intended to pay for the single program.
Another common example of this sales tactic is seen in the fast food industry. When you visit many fast food restaurants, a quick look at the menu reveals the option to buy certain foods together at a discounted price. These meals usually include a sandwich, a side item, and a drink offered at a small discount. As a value-added retailer, the restaurant is banking on more people ordering these combination packages rather than spending money on a single food or beverage item. By doing this, the buyer ends up spending more on the combo than he intended to spend buying just one sandwich.
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