Hi. We had previously posted on HN our startup about mixing Groupon mechanics with Facebook:<p>http://news.ycombinator.com/item?id=1988016<p>Twice, we had offers from businesses (one retailer and one technology vendor) for white-labeling deals, where we basically hand over our entire systems to them for white-labeling and integration, because they "have the infrastructure to scale" and "want to protect the privacy/security of their data," among other reasons. In return, they propose either a lump sum payment or revenue-sharing arrangement. I don't think that we would later be restricted from continuing to license our app to others, but I was wondering if doing white-labeling deals like this are common for startups (or product companies in general).<p>Our pricing is currently $9.95/mth, affordable even to the smallest online retailers. We have had sales with this model: low-touch and web-based. Why wouldn't they just pay and use, as opposed to coming up with complicated arrangements that would obviously cost them more? In general, what do you think of this sort of deals? What is in it for them, and for me, if anything?
When you are first starting out white-label offers can be enticing to say the least. I have not heard of any companies doing them recently though. Most of the time, white label is common in the hosting/web-based service (i.e. email/project management/support companies).<p>Like ecommando said, don't get sucked into it though, unless you can control every aspect of the deal, code, database, etc... As the white-label grows they will expect the world from you in terms of support/updates/code modifications/etc... They will take away from your time to support your own customers. I would offer a hybrid solution at most where you allow them to change the logo and remove references to your company, but you continue to host and control the code.<p>To answer your question on why they wouldn't pay/use, well it is all about marketing. They want to be able to offer something different from their competitors and make it look like they are the ones behind it.<p>As for pricing, NEVER, NEVER take a lump sum payment. Always work something from a revenue-share or monthly fee arrangement. You could even do an annual contract with built-in price increase each year based on percentages of their sales/revenue.<p>If your product is that good that other companies are approaching you to white-label the solution, the best advice I can give you is to review your marketing/sales strategy. Why can't you sell direct to their market? Why risk losing revenue and allowing them to make money off your product?
No. Don't do it. You will completely undermine any chances of being acquired, the white-label will own you if they grow larger, and you will find yourself losing control of your code and product. Focus on building your brand, your product. Cut costs if you need to make that happen, any way you can.<p>If they want a white label, tell them "Only if WE run it, we'll code it, and you won't have access to the code or database schemas."<p>The other option is "buy us out and we'll run it for you internally."<p>Cheers.