# Value Added Reseller (VAR)

A Value Added Reseller (VAR) is a business that takes existing technology products—such as hardware, software, or networking components—and adds value through specialised services, customisations, or integrations before selling the complete solution to an end client. Unlike a traditional retailer that simply moves boxes, a VAR acts as a consultant and technical partner, ensuring that the disparate pieces of a.

A **Value Added Reseller (VAR)** is a business that takes existing technology products—such as hardware, software, or networking components—and adds value through specialised services, customisations, or integrations before selling the complete solution to an end client. Unlike a traditional retailer that simply moves boxes, a VAR acts as a consultant and technical partner, ensuring that the disparate pieces of a technology stack work together to solve specific business problems.

In the managed services world, the lines between a VAR and an MSP often blur. While a VAR typically focuses on the initial sale, deployment, and configuration of a project, the modern MSP often uses the VAR model as a gateway to long-term recurring revenue. Successful firms understand that selling a piece of hardware is just the beginning of a deeper, more profitable client relationship.

- **System Integration:** Combining hardware and software from different vendors into a unified environment.
- **Professional Services:** Providing expert installation, configuration, and training to ensure user adoption.
- **Consultative Selling:** Helping clients identify technical gaps and recommending specific solutions to bridge them.
- **Lifecycle Management:** Managing the procurement, deployment, and eventual decommissioning of technology assets.

## Key Takeaways

- **Definition:** A Value Added Reseller (VAR) enhances third-party products with services to provide complete, turnkey solutions.
- **Revenue Model:** VARs rely on project-based margins and service fees, whereas MSPs prioritise recurring monthly revenue (MRR).
- **Business Value:** For clients, a VAR reduces the complexity of managing multiple vendors and technical specifications.
- **Risk Management:** A good VAR ensures that technology investments align with security requirements and operational goals.
- **Strategic Evolution:** Most modern technology providers operate as a "hybrid," blending VAR project work with MSP ongoing support.
- **Expertise over Inventory:** The true value of a VAR lies in their technical knowledge, not their ability to hold stock.

## How the VAR Model Functions in the Modern Market

In the early days of the IT industry, a Value Added Reseller (VAR) was primarily a middleman. You needed a server; they bought it from the manufacturer, added some RAM, installed an operating system, and delivered it to your office. Today, the "value" in Value Added Reseller has shifted toward strategy and security. 

Clients are no longer just looking for hardware; they are looking for outcomes.

A VAR identifies a client’s business need—perhaps a transition to a hybrid cloud environment or a total overhaul of their cybersecurity posture—and builds a bill of materials (BOM) that satisfies that need. They manage the procurement logistics, handle the licensing, and execute the implementation. The client receives a single invoice and a working solution, rather than twenty different boxes and a headache.

MSP Agenda was founded by Luis Navarro, following more than 15 years spent building and growing a successful Managed Service Provider. During his time co-founding Totality Services, Luis saw firsthand how the VAR side of the house fueled the MSP side. Selling the right solution as a VAR builds the trust necessary to manage that solution as an MSP. It’s about taking complicated procurement and making it simple for the business owner.

### The Components of "Value Add"

To be a successful Value Added Reseller (VAR), the "add" must be tangible. If you are just marking up a laptop by 10% without providing guidance, you aren't a VAR; you're just an expensive retailer. True value manifests in several ways:

- **Custom Configuration:** Pre-configuring devices so they are ready for use the moment they are plugged in (Zero-Touch Provisioning).
- **Security Layering:** Ensuring that every piece of hardware sold meets modern encryption and compliance standards.
- **Training and Enablement:** Teaching the client’s staff how to actually use the new software to improve productivity.
- **Warranty Management:** Acting as the point of contact for vendor defects or RMAs, saving the client time.

## VAR vs. MSP: Understanding the Practical Differences

It is common to hear these terms used interchangeably, but for anyone running a technology business, the distinction is critical for financial planning and valuation. A VAR is generally **transactional**, while an MSP is **relational**. A VAR completes a project and looks for the next one; an MSP signs a contract and looks for ways to keep the client forever.

However, the most successful firms are "hybrid." They use the Value Added Reseller (VAR) model to land new clients through large capital projects, then transition those clients into managed services contracts. This creates a balanced P&L with high-margin project revenue and stable, predictable recurring revenue.

| Feature | Value Added Reseller (VAR) | Managed Service Provider (MSP) |
| --- | --- | --- |
| **Revenue Type** | Project-based / One-time | Recurring Monthly Revenue (MRR) |
| **Primary Focus** | Implementation & Deployment | Ongoing Management & Support |
| **Client Relationship** | Point-in-time / Cyclical | Continuous / Long-term |
| **Sales Cycle** | Short to Medium (Product focused) | Long (Relationship/Trust focused) |
| **Profit Driver** | Hardware/Software Margins & Labour | Efficiency & Service Automation |

## The Commercial Reality of Being a VAR

If you’re operating as a Value Added Reseller (VAR), your margins on hardware are likely shrinking. Major manufacturers have squeezed the middleman, making it harder to survive on the "resell" alone. This is why the consultative approach is no longer optional—it is a survival mechanism.

Luis Navarro’s journey with Totality Services, which led to a successful eight-figure acquisition, was built on the realisation that technology is a means to an end. Luis wasn't the "technical guy"; his strength was sitting between the tech teams and the business owners. He understood that a client doesn't care about the specs of a firewall; they care about not being hacked and keeping their business running.

When a VAR focuses on these commercial outcomes, the conversation changes. You aren't arguing over the price of a switch; you are discussing the cost of downtime. This shift in perspective allows a VAR to charge for their expertise rather than just their ability to source parts.

### Strategic Procurement and Supply Chain

A major part of the Value Added Reseller (VAR) role in the US market is navigating the complex supply chain. Between global chip shortages and logistics delays, a VAR provides value by managing lead times. They know which vendors are shipping on time and which are backlogged for six months. For a client trying to open a new office, this knowledge is worth more than a discount on the hardware itself.

Furthermore, a VAR often has access to better pricing through deal registration programmes. By registering a project with a vendor like Cisco, Dell, or Microsoft, the VAR can secure lower costs that are not available to the general public, providing a price advantage to the client while still maintaining a healthy margin for the business.

## The Hybrid Model: Moving from Project to Partnership

For most MSP owners, the goal is to use the Value Added Reseller (VAR) model as a "wedge." A client might not be ready to commit to a $5,000-a-month managed services contract, but they might desperately need a new server or a security audit. By performing that work as a VAR, you demonstrate your capability and gain the "keys to the kingdom."

Once the project is complete, the transition to an MSP agreement is natural. You’ve just installed the system; who better to manage it? This is where the long-term enterprise value of the business is built. Projects provide the cash flow to grow, but recurring revenue provides the stability and the high valuation at exit.

- **Land and Expand:** Use a hardware refresh project to identify larger gaps in the client's IT strategy.
- **Standardisation:** As a VAR, you can dictate the stack. If you only sell one brand of firewall, all your MSP clients will be standardised, making support much more profitable.
- **Trust Building:** A successful, on-time, on-budget project is the best marketing for your managed services.

## Risk and Compliance as a Value Add

In the current United States regulatory environment, cybersecurity is the biggest "value add" a VAR can offer. Whether it's HIPAA in healthcare or CMMC in defence contracting, clients are overwhelmed by requirements. A Value Added Reseller (VAR) who understands these frameworks can sell solutions that are "compliant by design."

This is where clear communication is vital. As we often say at MSP Agenda, your client doesn't need a 40-page technical report. They need to understand what the risk is, why it matters to their bottom line, and what you recommend they do about it. A recommendation that a client doesn’t understand is a recommendation that will never be approved.

By framing a hardware sale around risk mitigation, the VAR moves from a vendor to a strategic partner. You aren't just selling a laptop; you're selling a secure endpoint that protects the company's intellectual property. That distinction is what allows for higher service fees and stronger client retention.

## Common Challenges for Value Added Resellers

Running a VAR-focused business isn't without its hurdles. One of the biggest risks is "lumpy" revenue. You might have a $200,000 month followed by a $20,000 month. Managing cash flow during these swings requires disciplined financial oversight. This is why many VARs eventually shift toward the MSP model to smooth out those peaks and valleys.

### Inventory and Credit Risk

Unlike a pure service business, a Value Added Reseller (VAR) often deals with physical goods. This means managing credit lines with distributors and the risk of a client defaulting on a large order. Successful VARs use escrow or require significant upfront deposits for hardware to protect their cash flow.

### Scope Creep in Professional Services

When a VAR quotes a project, it's usually based on a set number of hours. If the installation goes sideways because the client’s existing infrastructure is a mess, those hours can double quickly. Clear Statements of Work (SOWs) are essential. Without a clear SOW, the "value add" can quickly become a "margin killer."

### Vendor Dependency

Being a VAR means you are tied to the performance of your vendors. If a software update breaks a client's system or a hardware batch is defective, the client looks to the VAR for answers, not the manufacturer. Choosing the right partners is one of the most important strategic decisions a VAR can make.

## Best Practices for a Modern VAR Business

If you want to build a highly profitable firm, you need to move away from "accidental" sales and toward a structured process. This involves everything from how you conduct a security review to how you present your final proposal.

1. **Standardise Your Stack:** Don't try to be everything to everyone. Pick the best-in-class vendors for your niche and stick to them. This makes your team more efficient and your projects more predictable.
2. **Lead with Security:** Every project should have a security component. If you are replacing a network, include a security audit as part of the "value add."
3. **Focus on the Outcome:** Talk about business continuity, productivity, and risk—not specs, speeds, and feeds.
4. **Build a Professional Services Automation (PSA) Workflow:** Use tools to track every hour spent on a project to ensure you are actually making the margin you think you are.
5. **Integrate QBRs:** Use Quarterly Business Reviews to show the value of what you’ve already implemented and to plan the next phase of the client’s technology roadmap.

## The Future of the Value Added Reseller

The rise of SaaS and Cloud computing has led some to predict the death of the VAR. They argue that because there is no hardware to ship, there is no room for a reseller. The opposite is actually true. The complexity of the cloud has made the VAR more necessary than ever.

A "Cloud VAR" helps clients navigate the thousands of options in AWS or Azure, manages their licensing to prevent overspending, and ensures that their cloud instances are configured securely. The "product" has changed from a physical server to a virtual one, but the need for expert configuration and integration remains the same.

MSP Agenda was built around this exact reality. We believe that Security Reviews and technical recommendations should protect the client while also creating clear project opportunities for the provider. It’s about creating a cycle where the client gets better technology and the provider gets a healthier, more profitable business.

## Frequently Asked Questions

### What is the difference between a VAR and a Distributor?

A distributor is a massive entity that buys products directly from manufacturers and sells them to resellers. They handle the bulk logistics. A Value Added Reseller (VAR) buys from the distributor and adds services, expertise, and support before selling to the final end-user.

### Can an MSP also be a VAR?

Yes, and most are. This is often referred to as a "hybrid" model. The company acts as a VAR when they sell and install new projects, and acts as an MSP when they provide ongoing monitoring and support for those systems.

### How do VARs make money?

VARs make money through a combination of hardware/software markups, vendor rebates, and professional service fees for installation, configuration, and consulting. The most profitable VARs derive a larger percentage of their income from services rather than hardware margins.

### Why would a client buy from a VAR instead of directly from the manufacturer?

Manufacturers are generally poor at providing localized, personalised service. A Value Added Reseller (VAR) provides a "single throat to choke," handles the integration between different brands, and understands the specific business context of the client.

### What is a "Value Add" in the context of software?

For software, the value add is usually implementation, data migration, custom integrations (via APIs), and user training. A VAR ensures that the client doesn't just buy a license, but actually achieves the business goal the software was intended for.

### Is the VAR model still relevant with the rise of the Cloud?

Absolutely. Cloud environments are incredibly complex. A VAR now adds value by managing cloud architecture, optimising spend, and securing the environment. The focus has simply shifted from physical hardware to virtual infrastructure and identity management.

### How does a VAR improve a client's security?

A VAR improves security by ensuring that technology is not just "installed" but "hardened." They apply best-practice configurations, ensure proper encryption, and integrate security layers like Multi-Factor Authentication (MFA) and Endpoint Detection and Response (EDR) into the initial build.

## Structuring Your VAR for Maximum Enterprise Value

If your goal is to one day sell your business, as Luis Navarro did with Totality Services, you must look at your VAR activities through the lens of a buyer. An acquirer looks for consistency, high-quality documentation, and a clean path from project work to recurring revenue.

If your project work is chaotic and every client has a different set of technologies, your business will be difficult to scale and even harder to sell. By using the Value Added Reseller (VAR) model to drive **standardisation** across your client base, you make your ongoing support more profitable and your business more attractive to investors.

Ultimately, being a VAR is about more than just moving product. It’s about being the bridge between complex technology and the business leaders who need it to succeed. When you master that bridge, you stop being a vendor and start being an essential part of your client's growth.

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Source: https://mspagenda.com/glossary/value-added-reseller-var
Last updated: 2026-03-06