# Value-Added Resellers (VARs): What They Do and How They Fit the Tech Channel Published: 2026-02-16 Author: Warren Team URL: https://www.heywarren.com/blog/value-added-resellers --- Value-Added Resellers are the specialized intermediaries that make enterprise technology actually work in customer environments. They aren't just distributors passing boxes from manufacturers to buyers — they configure, customize, integrate, implement, and support the products. In enterprise IT, VARs are often more important than the original vendor for successful deployment. ## What Is a Value-Added Reseller? A **Value-Added Reseller (VAR)** is a company that purchases products from manufacturers (or distributors) and adds value through services, customization, or bundling before reselling to end customers. ![How a product moves from vendor to end customer through a VAR, with value added at each step.](data:image/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20viewBox%3D%220%200%20660%20125%22%20width%3D%22660%22%20height%3D%22125%22%20role%3D%22img%22%3E%3Ctitle%3EFlow%20diagram%3C%2Ftitle%3E%3Crect%20width%3D%22100%25%22%20height%3D%22100%25%22%20fill%3D%22%23f8fafc%22%2F%3E%3Crect%20x%3D%2230%22%20y%3D%2225%22%20width%3D%22170%22%20height%3D%2275%22%20rx%3D%2210%22%20fill%3D%22white%22%20stroke%3D%22%232563eb%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22115%22%20y%3D%2258.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EVendor%3C%2Ftext%3E%3Ctext%20x%3D%22115%22%20y%3D%2278.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2211%22%20fill%3D%22%2364748b%22%3Ebuilds%20product%3C%2Ftext%3E%3Cline%20x1%3D%22205%22%20y1%3D%2262.5%22%20x2%3D%22237%22%20y2%3D%2262.5%22%20stroke%3D%22%2364748b%22%20stroke-width%3D%222%22%2F%3E%3Cpolygon%20points%3D%22244%2C62.5%20235%2C57.5%20235%2C67.5%22%20fill%3D%22%2364748b%22%2F%3E%3Crect%20x%3D%22245%22%20y%3D%2225%22%20width%3D%22170%22%20height%3D%2275%22%20rx%3D%2210%22%20fill%3D%22white%22%20stroke%3D%22%232563eb%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22330%22%20y%3D%2258.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EVAR%3C%2Ftext%3E%3Ctext%20x%3D%22330%22%20y%3D%2278.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2211%22%20fill%3D%22%2364748b%22%3Econfigures%20%26amp%3B%20integrates%3C%2Ftext%3E%3Cline%20x1%3D%22420%22%20y1%3D%2262.5%22%20x2%3D%22452%22%20y2%3D%2262.5%22%20stroke%3D%22%2364748b%22%20stroke-width%3D%222%22%2F%3E%3Cpolygon%20points%3D%22459%2C62.5%20450%2C57.5%20450%2C67.5%22%20fill%3D%22%2364748b%22%2F%3E%3Crect%20x%3D%22460%22%20y%3D%2225%22%20width%3D%22170%22%20height%3D%2275%22%20rx%3D%2210%22%20fill%3D%22white%22%20stroke%3D%22%232563eb%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22545%22%20y%3D%2258.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EEnd%20Customer%3C%2Ftext%3E%3Ctext%20x%3D%22545%22%20y%3D%2278.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2211%22%20fill%3D%22%2364748b%22%3Edeployed%20solution%3C%2Ftext%3E%3C%2Fsvg%3E) *How a product moves from vendor to end customer through a VAR, with value added at each step.* The "value added" distinguishes a VAR from a pure distributor or reseller who simply moves products at a markup. VARs typically provide: - **Pre-sales consulting**: Understanding customer requirements, architecting solutions - **Configuration and customization**: Tailoring the product to customer needs - **Integration**: Connecting products with existing customer systems - **Implementation**: Installing, configuring, deploying - **Training**: Teaching customer staff to use the product - **Post-sales support**: Troubleshooting, updates, ongoing services - **Bundling**: Combining products from multiple vendors into integrated solutions ## Why VARs Exist VARs exist because enterprise technology is typically too complex for customers to deploy independently: **Complexity of enterprise IT**: Modern systems (ERP, CRM, network infrastructure, security) involve deep technical expertise, vendor-specific configurations, and integration with existing systems. **Vendor focus on product**: Software and hardware vendors focus on building products, not on deploying them at each customer. They rely on VARs for last-mile execution. **Customer requirements**: Enterprise customers want "one throat to choke" — a single partner responsible for making the solution work, rather than managing multiple vendor relationships. **Geographic and vertical specialization**: Customers prefer working with partners who understand their specific industry (healthcare, financial services, manufacturing) and geographic region. ## VAR Business Model **Revenue streams**: ![Services gross margins are roughly double product resale margins, driving VARs to shift revenue mix toward services.](data:image/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20viewBox%3D%220%200%20800%20210%22%20width%3D%22800%22%20height%3D%22210%22%20role%3D%22img%22%3E%3Ctitle%3EComparison%3C%2Ftitle%3E%3Crect%20width%3D%22100%25%22%20height%3D%22100%25%22%20fill%3D%22%23f8fafc%22%2F%3E%3Ctext%20x%3D%22230%22%20y%3D%2257.5%22%20text-anchor%3D%22end%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EProduct%20Margin%3C%2Ftext%3E%3Crect%20x%3D%22240%22%20y%3D%2225%22%20width%3D%22247.50000000000003%22%20height%3D%2255%22%20rx%3D%226%22%20fill%3D%22%232563eb%22%2F%3E%3Ctext%20x%3D%22499.5%22%20y%3D%2257.5%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22700%22%20fill%3D%22%232563eb%22%3E%2522%3C%2Ftext%3E%3Ctext%20x%3D%22230%22%20y%3D%22152.5%22%20text-anchor%3D%22end%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EServices%20Margin%3C%2Ftext%3E%3Crect%20x%3D%22240%22%20y%3D%22120%22%20width%3D%22450%22%20height%3D%2255%22%20rx%3D%226%22%20fill%3D%22%237c3aed%22%2F%3E%3Ctext%20x%3D%22702%22%20y%3D%22152.5%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22700%22%20fill%3D%22%237c3aed%22%3E%2540%3C%2Ftext%3E%3C%2Fsvg%3E) *Services gross margins are roughly double product resale margins, driving VARs to shift revenue mix toward services.* **1. Product margin**: Buy from vendor at discount (typically 30-50% off list), resell at or near list. Margin is the difference. **2. Professional services**: Implementation, integration, custom development — billed hourly or by project. **3. Managed services**: Ongoing support and operations under service contracts. **4. Support and maintenance**: Renewal fees for vendor support, often with VAR markup. **5. Training**: Technology training services for customer staff. **Typical revenue mix**: - Product resale: 40-60% - Professional services: 30-50% - Managed services: 10-30% (growing for most VARs) **Margins**: - Product margins: 15-30% gross - Services margins: 30-50% gross - Overall gross margin: 25-40% - Operating margins for healthy VARs: 5-12% ## Types of VARs ### 1. Technology-Specific VARs ![The five main VAR categories, from technology-specific partners to managed service providers.](data:image/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20viewBox%3D%220%200%20760%20211%22%20width%3D%22760%22%20height%3D%22211%22%20role%3D%22img%22%3E%3Ctitle%3EHierarchy%3C%2Ftitle%3E%3Crect%20width%3D%22100%25%22%20height%3D%22100%25%22%20fill%3D%22%23f8fafc%22%2F%3E%3Crect%20x%3D%22300%22%20y%3D%2220%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22%232563eb%22%2F%3E%3Ctext%20x%3D%22380%22%20y%3D%2254%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22700%22%20fill%3D%22white%22%3EVARs%3C%2Ftext%3E%3Cpath%20d%3D%22M%20380%2078%20L%20380%20105.5%20L%20110%20105.5%20L%20110%20133%22%20stroke%3D%22%23cbd5e1%22%20stroke-width%3D%222%22%20fill%3D%22none%22%2F%3E%3Crect%20x%3D%2230%22%20y%3D%22133%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22white%22%20stroke%3D%22%230891b2%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22110%22%20y%3D%22158%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2213%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3ETech-Specific%3C%2Ftext%3E%3Ctext%20x%3D%22110%22%20y%3D%22176%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2210%22%20fill%3D%22%2364748b%22%3Ee.g.%20Cisco%2C%20SAP%3C%2Ftext%3E%3Cpath%20d%3D%22M%20380%2078%20L%20380%20105.5%20L%20290%20105.5%20L%20290%20133%22%20stroke%3D%22%23cbd5e1%22%20stroke-width%3D%222%22%20fill%3D%22none%22%2F%3E%3Crect%20x%3D%22210%22%20y%3D%22133%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22white%22%20stroke%3D%22%230891b2%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22290%22%20y%3D%22158%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2213%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EVertical%3C%2Ftext%3E%3Ctext%20x%3D%22290%22%20y%3D%22176%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2210%22%20fill%3D%22%2364748b%22%3Ehealthcare%2C%20finance%3C%2Ftext%3E%3Cpath%20d%3D%22M%20380%2078%20L%20380%20105.5%20L%20470%20105.5%20L%20470%20133%22%20stroke%3D%22%23cbd5e1%22%20stroke-width%3D%222%22%20fill%3D%22none%22%2F%3E%3Crect%20x%3D%22390%22%20y%3D%22133%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22white%22%20stroke%3D%22%230891b2%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22470%22%20y%3D%22158%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2213%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EGeographic%3C%2Ftext%3E%3Ctext%20x%3D%22470%22%20y%3D%22176%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2210%22%20fill%3D%22%2364748b%22%3Eregional%20partners%3C%2Ftext%3E%3Cpath%20d%3D%22M%20380%2078%20L%20380%20105.5%20L%20650%20105.5%20L%20650%20133%22%20stroke%3D%22%23cbd5e1%22%20stroke-width%3D%222%22%20fill%3D%22none%22%2F%3E%3Crect%20x%3D%22570%22%20y%3D%22133%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22white%22%20stroke%3D%22%230891b2%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22650%22%20y%3D%22158%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2213%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3ESolution%20SI%3C%2Ftext%3E%3Ctext%20x%3D%22650%22%20y%3D%22176%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2210%22%20fill%3D%22%2364748b%22%3EAccenture%2C%20Deloitte%3C%2Ftext%3E%3C%2Fsvg%3E) *The five main VAR categories, from technology-specific partners to managed service providers.* Focus on a specific vendor or technology stack: - Cisco partners (networking) - Microsoft partners (Office 365, Azure, Dynamics) - Salesforce partners (CRM implementation) - SAP partners (ERP implementation) Often receive certified partner status, co-marketing support, and discounts. ### 2. Industry-Vertical VARs Focus on a specific industry: - Healthcare IT VARs (EHR implementation, HIPAA compliance) - Financial services VARs (trading systems, compliance) - Manufacturing VARs (SCADA, MES systems) - Education VARs (learning management systems) Vertical expertise enables them to speak customer language and understand industry-specific requirements. ### 3. Geographic VARs Regional or country-specific partners serving customers in a defined area. Common in emerging markets where global vendors lack direct presence. ### 4. Solution Integrators (SIs) Larger firms (Accenture, Deloitte, IBM Global Services, Infosys, TCS) that provide more consulting-heavy offerings. Often engage as program leads for major enterprise deployments. ### 5. Managed Service Providers (MSPs) Focus on ongoing management rather than one-time implementation. Monitor, patch, and operate customer IT environments under long-term contracts. ## The Vendor-VAR Relationship ### Channel Partner Programs Technology vendors structure formal partner programs with tiered levels: - **Authorized**: Basic certification, limited discounts - **Silver/Certified**: Mid-tier with better discounts and support - **Gold/Premier**: Top-tier with highest discounts, marketing development funds (MDF), and exclusive opportunities - **Elite/Global**: Strategic partners with bespoke arrangements Requirements typically include: sales volume, technical certifications, customer satisfaction scores, marketing activity. ### Partner Benefits VARs gain from vendor relationships: - **Discounts**: Better prices than end customers pay - **Rebates**: Back-end payments based on volume achieved - **MDF (Market Development Funds)**: Subsidies for co-marketing campaigns - **Leads**: Vendor-generated sales leads passed to partners - **Training**: Technical training and certification programs - **Deal registration**: Protection against other partners competing for the same deal - **Beta access**: Early access to new products ### Vendor Requirements Vendors require commitments from VARs: - Sales targets and commitments - Technical certifications (e.g., 10 engineers certified on product) - Customer satisfaction scores - Marketing activity - Growth commitments ## VAR Selection Criteria for Customers When customers choose a VAR, they evaluate: **1. Technical certifications**: Number of certified engineers for the products being deployed. **2. Experience with similar projects**: References for similar customers in similar industries. **3. Project management capability**: Ability to deliver on time, on budget. **4. Financial stability**: VAR needs to be solvent through project lifecycle and ongoing support. **5. Geographic coverage**: For multi-location deployments, VAR needs field presence. **6. Support hours and SLA**: 24/7 support, guaranteed response times. **7. Neutrality vs. vendor preference**: Some VARs are vendor-agnostic (recommend best product); others are tied heavily to specific vendors. **8. Pricing**: Including both product pricing and services rates. ## VAR Channel Challenges ### Commoditization of Product Margins Cloud and subscription models have pressured traditional VAR product margins: - Cloud software: Vendors sell direct; VAR margins compress - Subscription pricing: Smaller upfront payments, spread margins - Transparency: Customers easily compare prices online **VAR response**: Shift emphasis to services, managed services, and value-added offerings rather than product resale. ### Direct Sales by Vendors Large customers increasingly bought directly from vendors (Oracle, SAP, Microsoft for enterprise), reducing VAR involvement on big deals. VARs retained stronger positions in mid-market and complex projects. ### Platform Shifts The shift to cloud (AWS, Azure, Google Cloud) changed VAR roles: - Less infrastructure hardware to sell - More focus on cloud migration, architecture, and ongoing operations - New cloud-native VARs emerged (AWS partners like Mission, Cloudreach) ### Consolidation The VAR industry has consolidated substantially: - Private [equity](/blog/equity-meaning-in-business) rollups (World Wide Technology, CDW, Insight Enterprises) - Focus on scale economies in back-office operations - Acquisition-driven geographic expansion ## VARs in Specific Markets ### Networking VARs Companies like CDW, Presidio, World Wide Technology specialize in networking infrastructure (Cisco, Juniper, Arista). Deploy data center networks, SD-WAN, security. ### Security VARs Optiv, GuidePoint Security, Trace3 focus on cybersecurity — combining products from Palo Alto Networks, CrowdStrike, Splunk with integration and managed detection services. ### Cloud VARs New generation focused on cloud adoption: - AWS partners: Mission (acquired), Onica (now DXC) - Azure partners: Synoptek, 2nd Watch - GCP partners: SADA Systems, Pythian ### Vertical SaaS VARs Specialized in industry SaaS: - Veeva Systems partners (life sciences) - Epic/Cerner partners (healthcare) - nCino partners (banking) ## The Future of the VAR Channel **Trends shaping VARs**: **1. Services mix expanding**: Product resale declining; services and managed services growing as percentage of revenue. **2. Cloud-first**: VARs must transform their businesses for cloud (recurring revenue, different margin structures, managed services). **3. AI and automation**: AI reshaping both the products VARs sell and how VARs deliver services. **4. Cybersecurity emphasis**: Security-focused offerings growing fastest in VAR portfolios. **5. XaaS (Everything as a Service)**: Customers want outcome-based purchasing; VARs restructuring offerings accordingly. **6. Vendor-agnostic strategies**: Customers increasingly want objective advice — VARs positioning as trusted advisors. ## Authoritative Sources For deeper background and primary-source data on this topic, the following authoritative sources are useful starting points: - [IRS](https://www.irs.gov/) - [SEC](https://www.sec.gov/) - [Federal Reserve](https://www.federalreserve.gov/) ## Conclusion Value-Added Resellers occupy an essential position in the enterprise technology ecosystem — connecting product vendors with customer business needs through the complex work of customization, integration, and implementation. While traditional product-resale margins have compressed under cloud and subscription models, the underlying need for skilled deployment and ongoing management has grown. Modern VARs are increasingly services-heavy, often with managed services driving the best growth and margins. Understanding VAR relationships is valuable for anyone involved in enterprise IT purchasing, vendor selection, or channel strategy. For related business and strategic topics, see our guides on [RFP meaning](/blog/rfp-meaning), [Porter's 5 Forces](/blog/porters-5-forces), and [management buyouts](/blog/management-buyout). Warren at [heywarren.ai](https://heywarren.ai) helps investors analyze technology companies, channel economics, and the companies that power enterprise IT. --- ## Related Reading **More from Warren**: - [What Is Non Recourse Lending?](/blog/non-recourse-lending) - [What Are Finders Fees?](/blog/finders-fees) **Authoritative sources**: - [SEC Investor.gov — Investing Basics](https://www.investor.gov/introduction-investing/investing-basics) - [FINRA — Investor Education](https://www.finra.org/investors)