Value-Added Reseller (VAR)

A Value-Added Reseller buys software from a vendor at a discount and sells it to end customers with something extra layered on top. That extra is the value added:

• Implementation and configuration
• Training
• Ongoing support
• Industry-specific customization
• The VAR's own complementary product

VARs matter in B2B SaaS because they extend a vendor's reach into industries, regions, and deal sizes the direct sales team cannot cover economically. They also absorb the last-mile work that many software vendors would rather not staff: migrations, integrations, and hands-on customer support.

How it works in B2B SaaS

The relationship starts with a reseller agreement that sets the VAR's discount off list price, often called the channel margin, along with support obligations and branding rules. Reseller agreements carry real commercial and legal weight, so have counsel review them; this is not legal advice.

From there the VAR sells under its own paper or the vendor's. In SaaS there are two common billing models: the VAR bills the customer and pays the vendor the discounted price, or the vendor bills the customer directly and pays the VAR a margin on each renewal. Deal registration protects the VAR's pipeline from channel conflict with the vendor's own sales team.

A worked example

Take DataBridge, a SaaS vendor with a $1,000 per month list price, and Meridian Systems, a VAR serving logistics companies. Meridian buys at a 25% discount, so $750 per month, and sells to a freight customer at list price.

On top of the subscription, Meridian sells a $15,000 implementation project and a $500 per month managed support package. Year one for Meridian looks like this:

• $12,000 in subscription revenue
• Minus $9,000 paid to DataBridge
• Plus $15,000 in implementation services
• Plus $6,000 in managed support

That is $24,000 in gross profit, most of it from services.

DataBridge books $9,000 in ARR it likely would not have won directly, with no sales cost beyond the margin. Both sides earn more when the customer renews, which is why good VAR relationships compound over time.

Typical ranges and benchmarks

SaaS reseller discounts commonly run between 15% and 30% off list price, often tiered by certification level or annual volume. Renewal margins are typically lower than first-year margins, reflecting the lighter lift of retaining a customer versus acquiring one.

For the VAR itself, services usually dominate the economics. It is common for a VAR to earn several dollars of services and support revenue for every dollar of software margin, which is why smart VARs choose vendors whose products create implementation work, not vendors with the highest headline discount.

VAR vs reseller

Every VAR is a reseller, but not every reseller is a VAR. A plain reseller passes licenses through, competing mostly on price and procurement convenience, and the customer relationship stays thin. A VAR wraps services and expertise around the product and typically owns the customer relationship, including first-line support.

The label matters for program design. Plain resellers need low friction and fast quoting. VARs need enablement, certification, sandbox access, and technical depth. Treating both the same usually means serving both badly.

How it shows up in affiliate and partner programs

VARs sit at the high-touch end of the partner spectrum, affiliates at the low-touch end, and mature SaaS programs often build a ladder between them. A content affiliate who keeps sending qualified traffic may graduate to referral partner, then to certified reseller.

The infrastructure differs by rung. Affiliates are tracked with links and paid commissions; VARs are tracked through deal registration in a partner portal and compensated through margin. Vendors that force VAR-style deals through affiliate tracking, or the reverse, create attribution disputes.

Common mistakes

The most common vendor mistake is signing many VARs and enabling none. A logo on the partner page sells nothing; the first deal usually requires training, co-selling support, and often market development funds. The second is channel conflict: letting the direct team compete for a VAR-registered deal destroys trust across the whole channel at once.

VARs make mistakes too, most often picking vendors on discount percentage rather than on product stickiness, support quality, and whether the product generates services work. A 30% margin on software nobody renews is worth less than a 20% margin on software that expands.

Frequently asked questions

Do VARs still make sense for SaaS, or is this a legacy model?

The model has survived the shift to SaaS, but the economics moved from one-time license margins to recurring margins plus services. VARs remain especially relevant where buyers need implementation, compliance expertise, or local-language support that a remote vendor cannot deliver.

How does a VAR earn money on a subscription product?

Two ways, usually combined. It earns a recurring margin, either by reselling the subscription at a markup or by receiving a share of each renewal from the vendor. And it sells its own services around the product: implementation, integrations, training, and managed support, which often exceed the software margin.

Can a company be both an affiliate and a VAR?

Yes. An agency might publish tracked comparison content as an affiliate while also reselling and implementing the product as a VAR. The key is keeping the two compensation streams cleanly separated so a single deal is never paid twice under different rules.