White Label vs Private Label – What is the difference?
Introducingnew software in the market is a tricky task. When any business is looking to increase its reach to a wider audience or starting from scratch, the2 most common practicesthat are followed will be covered in this article:
- WhiteLabeling
- Private Labeling
While these terms are ofteninterchangeable, several differences between themneed to be encountered while dealing with your businesses.To be precise, White Label software solutions are made to be used by a larger audience while Private Label software solutions are created exclusively for a single company usage. Let’s discuss both in detail, but before that let’s shed some light on the main differences between them.
Differences between White Label and Private Label
- White label software products are often created in advance or at short notice, so they can be delivered effectively. While private label software can take a longer time to come into the market due to the customization process.
- White label software is created to be sold to multiple companies, while private-label software is created exclusively for a single company.
- With white-label specifications, the client can specify a few details for customization, whereas, with private-label specifications, the client has full control over the designs and specifications.
- White-label software has to face higher competition in the market. But, the case is fully opposite for private-label as they enjoy an advantage of the unique market.
Now, let’s discuss in detail.
What is White-Labeling?
When software is made by one company and sold under another brand by doing a few customizations according to the needs like changing the logo and brand name is called White-Labeling. Many companies follow this practice of outsourcing the software for their own purposes rather than building the software from scratch.
It can be customized according to their branding and marketing needs. The company that is purchasing the software can not influence the standards of the same because they are made to fulfill the basic requirements of the software already.
For example, a software manufacturing company purchases a white-label software solution from another company, rebrands it, adds its logo, and re-sells it to its clients. For this, they approach the company offering White-Label Software Development services.
Benefits of White-Labeling
- Reduced Cost
To make the software more affordable for the user company that is going to purchase it, the costs of research, production, and development of the software are handled by the white-labeling companies which makes it more affordable.
- Speed-Up Product Launches
As mentioned in the above point, you don’t need to invest in research and development of any software if you are heading for White-Labeling. Instead, you need to focus on your branding and marketing which makes it easy to launch the software in the market.
- Minimize Risk
When it comes to white-labeling software, the product that has been tried and tested many times comes into the market. This ultimately, reduces the risk of the company that is purchasing the software when it comes to the reliability of software.
Examples of White-Labeling
- E-commerce platforms
- Supermarket Products
- Digital Marketing Service Providers
And the list goes on…
What is Private-Labeling?
If we talk about the Private-labeling concept, it is a product that is made by the companies from scratch which is to be sold uniquely to another company. The manufacturer produces original products/software by working on the client’s specifications. The products are made from scratch, rebranded, and sold exclusively by third-party companies. The company that is purchasing the software can influence the standards of the product because they are made uniquely to fulfill the requirements of the software.
For example, if a company is producing software from scratch and that too with unique specifications to sell it to another company, then it will be known as private labeling.
Benefits of PrivateLabeling
- Easy and unique customization
After launching a product in the market, it’s easier and quicker to make any changes/improvements in your product, if the full control is with you regarding production. Because the customer’s needs are better known by you rather than someone else.
- Better Pricing Control
The private labeling manufacturer can have the full right to ask for higher prices for the products made to gain higher margins as it is made exclusively for a third party. Leading to this, the manufacturer could hold a monopoly on their products.
- Competitive Edge
The unique products can be sold under private labeling which leads to better hold in the market as the competitors could not sell the same product, which you are selling in the competitive market.
Examples of PrivateLabeling
- Clothing retailer
- Bakeries selling unique products
And more…
Which is the right choice for your business?
Whether you want a unique product or a common product, that totally depends upon your choice of the two: white-labeling or private-labeling. You need to decide what is best for your business according to your goals, budget, and marketing strategy!
Choose White-label software solutions, if:
- You are in a hurry to launch your software.
- You are not interested in much research work.
Choose Private-label software solutions, if:
- You have a good budget for your product.
- You want to retain a competitive advantage.
Conclusion
The choice of selecting either White-Label solutions or Private-Label solutions for your business is totally your call. This article might have helped you to make a clear choice for the same. Companies offering White-label software development services provide an economical and faster launch of the software products in the market, which allows companies to do rebranding with minimal customizations and sell it at a higher margin. Whereas, private labeling allows the companies to have full control over the software specifications, uniqueness, etc. but requires longer development time and higher initial investment.
