Ideally, your business would have all unique private label software to provide and support your existing infrastructure. Unfortunately, that’s not often the case, and white labeling products are a great alternative for providing software without expending the manpower to create it.
We’ll examine white label vs. private label services and why one might be better than the other for your business. No matter what business you provide, odds are the competition is fierce, and you need everything possible to give you an edge.
White labeling can be a great boon for businesses to add more products and services to their offerings.
White Label Vs. Private Label
Before we dig into the benefits and problems with private and white labeling, we should define what each is for a business. If you offer a private label product or service, then it means it’s something unique to you.
For example, if you offer a loyalty program for your customers and have an in-house program you created from scratch, you have a private label loyalty software.
White label software is produced by someone else that you can add your brand and information too. For example, if you want to offer a loyalty program but don’t have the money or ability to create your own, you can use white label software, which is already created and can place your brand on it.
Other businesses can use the same software for their loyalty programs, but they put their own branding on it. You both use the same software, but it’s designed for each of the businesses. Any company can use that service and put their brand on it.
Which is best for your company? It depends on your exact needs, but for many white labeling is easier and provides support than a private label. We’ll examine the pros and cons of each of the services below, and you can determine which fits your business model.
Problems with Private Label Products
The greatest aspect of a private label product is it is something only you can sell. There isn’t anything else exactly like it on the market. It’s unique, but not all your customers know that.
Let’s take the website loyalty program example from earlier. If you have your loyalty program that provides the same type of loyalty programming as other companies and it’s private label, you’re stuck if something goes wrong. Since the program was created specifically for your company, only your company and the original programmer can fix any issues.
There’s also the cost of creating private label software. Both white and private label products often require a third party manufacturer, so they both have similar manufacturing costs. You also have the cost of instructing your employees or hiring employees to use that service or sell the product.
Generally, the cost of creating and marketing a private label service or product is more than the cost of white labeling. For white labeling, the cost of creating the service or product is handled by the original manufacturer.
Your business pays a fee to use that service or product and put its branding and packaging from it. This makes it appear as if your company is creating the service or product when, in reality, you’re using a third party.
Benefits of White Labeling Products
The best benefit of a white label product is using a superior service or product and providing it to customers with your branding. White labeling is perfect for new companies that may not have the capital or manpower for private label services and products.
Often, a business starts as a white-label, and as profits grow, they begin making their own unique products and services as private labels. There is no end to the services and products you can white-label, including customer loyalty programs.
It’s also not uncommon for companies to mix both private and white label services and products. For example, a company may have several white label products sold on their site and have a few private label products mixed in.
This makes the website appear to be filled with products, yet you only have a few private label items. It makes the website look great, and your private label products are your anchor that gets people to purchase related white label products.
White label products don’t require extensive research and cost to create. You don’t have to work on a design, create prototypes, find the right manufacturer, etc. A new product can create a major buzz, but the start-up costs are often extremely high.
The potential for a higher return on investment is better for white-label, and if you use it via a loyalty program, you have the entire company to help you if something goes wrong or if you have questions.
The best way to defeat this is through proper marketing. Tech companies use white labeling often to provide a ready to use the system for their clients. It’s a great way to supplement their current programs with something already proven and trusted.
Choose a Version Ideal for Your Situation
If you’re a business thinking about creating a new loyalty program or looking to add a third party product to your own offerings, it’s important to know white label vs. private label products and services. Would your business be better with unique private label services or with third-party services or items that you can place your brand and packaging on?
We hope this guide gives you what you need to determine which is best for you or perhaps both. If you want to know more about private and white label services or interested in our many customer loyalty program options, please contact us today.
