What is White Labeling?
A white label product is a product made by one company, but sold under a different brand name. In other words, white labeling is when you sell a product under your brand name, but the product is produced by someone else.
Interestingly, services can be white labeled as well. The requirement for a service to be considered “white label” is that you must be buying a service from another company, and reselling it to your customers as your own service. While outsourcing is often white labeled, the two are not interchangeable.
How Does White Labeling Work?
White labeling is remotely similar to drop shipping, in that the manufacturer of the product you are selling sells it to you for a lower price than you will sell it for. You are buying the product from a manufacturer to sell it as your own, at any price you want.
However, the products are sold under your brand’s name – not under the brand name of the manufacturer. You are marketing the products exclusively as your own.
This goes for white label services as well. You are charging your customers more for your service than you are paying another company for it.
White labeled services should not be confused with outsourcing because of quality. An outsourced service by itself is usually less inexpensive, and for a reason. A white label service is controlled by contract, managed by your company. You are technically outsourcing client work, but to a trusted partner that has agreed to provide your quality and brand of service for an agreed upon rate.
The Pros & Cons of White Labeling
White labeling provides faster solutions. It can save your business time and money by taking advantage of already developed products. It also allows you to continue doing what you are best at – being creative and marketing your brand.
For manufacturers and service providers, it can be beneficial to enter into white label relationships for a few reasons. You don’t have to spend nearly as much time or money marketing your own brand, as your success rests on the shoulders of your partner. You get to spend most of your time doing what you’re best at, while likely receiving orders and projects you wouldn’t get on your own.
The downside of white labeling falls more to the manufacturer. Manufacturers don’t get credit for their products. Similarly, service businesses don’t typically get credit for their work.