White label opportunities for a solopreneur?
5 comments
I wouldn't touch profit sharing with a 10 foot pole. You'd be surprised by how creative they can get at inflating expenses.
A lot depends on the detail of their definition of 'white label'.
Do they want just a version of the product that has their branding front and center, but which with even a cursory scratching of the surface is your product.
Or do they want a complete white-label version including domain names (incl. backend services not shown in the browser), email, payment processing, etc, etc.
In the later case unless they are willing to pay $$$$$ up front for the development it would seem very unlikely to be worthwhile.
In the former case, you could decide if it is worthwhile for a moderate amount of development effort and perhaps even include a 'Powered by ...' link in the footer. Then offer them a 30% discount on pricing: eg. a plan that costs $300\year normally you'll sell them for $210 and require they market it at a price of at least $300 ... if they can sell it for more and capture more profit take that as a signal to raise your prices!
Do they want just a version of the product that has their branding front and center, but which with even a cursory scratching of the surface is your product.
Or do they want a complete white-label version including domain names (incl. backend services not shown in the browser), email, payment processing, etc, etc.
In the later case unless they are willing to pay $$$$$ up front for the development it would seem very unlikely to be worthwhile.
In the former case, you could decide if it is worthwhile for a moderate amount of development effort and perhaps even include a 'Powered by ...' link in the footer. Then offer them a 30% discount on pricing: eg. a plan that costs $300\year normally you'll sell them for $210 and require they market it at a price of at least $300 ... if they can sell it for more and capture more profit take that as a signal to raise your prices!
Offer a reseller program.
1. They sign a Non-compete agreement to ensure they don't become your competitor. Get a lawyer involved to protect yourself.
2. They pay a huge upfront fee. Call it "licensing" or "new reseller" fee. If they dont agree, move on. This fee should cover at least 12-18 months of average profit you make per client generally.
3. On top of the fixed one time fee, they pay you a flat fee per customer that they onboard. This could be harder to verify so the upfront fee should be your minimum guarantee.
Generally profit sharing sounds great on paper but you wont be able to track those metrics unless you are the one who hosts the software.
1. They sign a Non-compete agreement to ensure they don't become your competitor. Get a lawyer involved to protect yourself.
2. They pay a huge upfront fee. Call it "licensing" or "new reseller" fee. If they dont agree, move on. This fee should cover at least 12-18 months of average profit you make per client generally.
3. On top of the fixed one time fee, they pay you a flat fee per customer that they onboard. This could be harder to verify so the upfront fee should be your minimum guarantee.
Generally profit sharing sounds great on paper but you wont be able to track those metrics unless you are the one who hosts the software.
Hard to say. It's a complex decision based on your company's specifics. If you do it, I'd suggest you strongly consider charging them a largish upfront fee, like a licensing or franchising fee. Otherwise you risk bootstrapping a competitor without any compensation for that risk. Revenue split for affiliate deals (that's close to what this is) is often a function of base price + margin - customer acquistion costs. Kind of like how Apple lets retailers sell Macbooks for price X but no lower. So affilates can charge any amount above a profitable floor that you have set.
If everything goes to hell, can you afford a long court battle against your partner? If the answer is no, don't even think of doing it - joint ventures like this have a peculiar tendency to become non profits. If the answer is yes and if they are willing to make a large cash payment up front (to compensate you for your time), make sure to get very clear terms around what expenses are allowed to be charged to the joint account.
Essentially, they want me to launch the same service branded for them (data, customers, servers, etc are mine, but the branding is theirs) but sharing the profits (they do the marketing, etc).
Is this wise? What kind of revenue split is normal for these kind of arrangements?