The Reseller Dilemma – Combining Services With Third Party Products

You’ve started a small services-based business and you’re looking to increase your income a bit. A common choice is to become a reseller of products you work with on a regular basis. This seems like a good idea at first, but there are some things you need to consider before going this route. Some potential problems are listed below. This article in no way states that you should not become a reseller of any legitimate product, only that you should be armed with a few truths before making the decision for yourself.An Unintentionally Closed MindThis is one of the most pronounced drawbacks and it can really come back to bite you. Let’s say, just for the sake of having an illustration, you are a computer repair technician as I am. You get multiple calls from home users who need virus removal. When you go to remove the virus (or more realistically, viruses) from their computer you notice they have no anti-virus software so you offer to install your preferred anti-virus software on their system if they don’t have another preference for software. There is absolutely nothing wrong with this, and this is how many professionals work; they find a product which they like and which works and they recommend it when they see a need for it. If, however, instead of “I see you have no anti-virus software on your system, which puts it at risk for reinfection. I will be glad to install one for you if you would like.I can recommend some that have worked very well for other clients in the past if you don’t have any preferences,” you say “I see you don’t have any anti-virus software which puts your system at risk. I can install (product name) for you if you would like,” you could be shutting out an even better program just because of your reseller status with the first program. Likewise, if the new release of a competing anti-virus software is more effective and runs more smoothly than the one you are selling, you need to ask yourself if you would still recommend the one you have been working with or if you would do what would be better for your client. If the decision comes down to making the money as a reseller (meager though it may be), this may be a warning sign. If you own a services-based business, services need to be at the top of the food chain in your mind. anything that gets in the way of that could easily turn into a threat to your practices and reputation.Is Reselling Worth It?This may seem like a bash to the product-based companies that rely on their reseller channels for a portion of their business, but it isn’t. Let’s say you are reselling a product that costs $30. You have a generous deal with the manufacturers which gives you a 15% commission on each unit you sell. This is a nice commission as some places will give you significantly less. However, for each unit you sell, you get $4.50 in this scenario. You soon realize 15% isn’t as big as it sounds. I am not denying that if you sell a large quantity of the product that you can make a nice chunk of folding money, however for the small services-based business owner or employee, this is not likely to be a reality. The question must be asked, “What is my ROI for my time, energy and resources expended to become and be a reseller of this product?” If you are satisfied with the answer this shouldn’t be an issue, however it is an important question to ask.Why Are You Partnering With This Company?In a services-based business, it is important to keep your business revolving around services. When considering becoming a reseller, you must ask yourself why you are choosing each individual partner. Is it because you truly believe in this product or is it because of the commission you will be getting? It is important to remember your primary focus is the services you provide and the quality of service you provide to your clients. If you feel you have any motivation to become a reseller from anything other than to better your ability to do these things, you might want to rethink what you are doing.Again, I am not saying that becoming a reseller is a bad thing. It can be quite helpful and can aid in increasing productivity. The focus of this article has simply been to make you think about the possible disadvantages as well as your own motives. I wish you all the best of luck on your ventures.
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