White Label vs Private Label – What’s the Difference? 

We’re going to settle the White Label vs Private Label debate once and for all. White Label and Private Label are often used interchangeably. However, there is a difference which most people don’t understand. Some people will say that “Private Label” has to do with products and that “White Label” has to do with services. But this assertion that one term has to do with products and the other does not is incorrect. We know this because of the etymology of the word White Label: “The name derives from the image of a white label on the packaging that can be filled in with the marketer’s trade dress. Its origins can be traced to white label promo vinyl records.” So, we see that Private Label is not exclusive to products.

So, what is the difference between white label and private label?

The difference is who specifies what the product or service will contain. In a private label relationship, the buyer specifies the design, parts, ingredients, or offerings. In a white label relationship, while the provider or manufacturer may offer a range of customizations to fit specific needs, they specify the design, parts, ingredients, or offerings. Sound confusing, it’s not. Just keep reading it will become clear shortly.

The concept has more clarity when it comes to products and loses some distinction when looked at with services, which is most likely why the misnomer came to be that the term white label is related only to services.[bctt tweet=”What is the difference between white label and private label? The difference is who specifies what the product or service will contain.” username=”ThatCompanycom”]

White Label vs Private Label vs. Reseller Products Compared:

Let’s start with products first: (or jump to White Label vs. Private Label Services)

Private Label Products:

A private label product is manufactured by a contract or third-party manufacturer and sold under your brand name. As the buyer, you specify everything about the product – what goes in it, how it’s packaged, what the label looks like. Typically you pay to have it produced and delivered to your warehouse or store, although you can sometimes contract to have it drop shipped. You then sell the product to other wholesalers or directly to consumers.

A Private Label Product example: You (Mrs. Jones) have a family recipe for Apple Pie. You find a manufacturer that can mass-produce apple pies using your EXACT recipe. That manufacturer makes and bakes your apple pies, puts them in the packaging (specified by you) with Mrs. Jones Apple Pies, and sells and ships Mrs. Jones Apple Pies to you. You can either: Sell Mrs. Jones Apple Pies to Wholesalers who then sell it to retail grocers, or you sell Mrs. Jones Apple Pies at www.mrsjonesapplepies.com.

Reseller of Products

Contrast the above with buying products from other companies with their brand names on them.  In this case, you buy the product from the manufacturer with their label (and brand) on it.  You then resell the product to your customers.

Reseller example: You own a store, and you buy Mrs. Jones Apple Pies, and then you sell (resell) them to your customers.

White Label Products:

White label products are manufactured by a contract or third-party manufacturer and sold under your brand name. As the buyer, you ONLY specify what the label looks like. In this case, the manufacturer is already an expert in manufacturing the product you want,  they produce the same product under other brand names, and therefor the manufacturer specifies the what goes in it and how it’s packaged other than the brand name you specified that appears on the label.

A White Label Product Example: You (Mr. Smith) want an Apple Pie that Looks like you made it, but you don’t have a recipe or the ability to mass-produce apple pies. You contract with a manufacturer who specializes in making delicious apple pies. They take their apple pie, bake it, package it, and put your label Mr. Smith’s apple pies on it.  They ship Mr. Smith’s Apple pies to you. You can either: Sell Mr. Smith’s Apple Pies to Wholesalers who then sell it to retail grocers, or you sell Mr. Smith’s Apple Pies at www.mrsmithspplepies.com.

Why Can Private Label Products Be More Expensive Than White Label Products?

Simply put, manufacturing efficiency. Because private label products are entirely specified by you, the manufacturer must build a manufacturing process or system that is only used to create and develop your products.  While there may be similarities between your product and another similar product they manufacture, your product is uniquely yours (exclusive). Those changes to the manufacturing process increase costs which are passed on to you.

In the case of white label, you lose exclusivity, meaning the manufacturer can produce the same product for you and others, while all that changes is the label. Because the manufacturer can produce the same product repeatedly for multiple customers, those efficiencies are shared with you, and other buyers and the resulting reduced costs are passed on to you.

This is, of course, can change if you have enough volume to offset these cost factors. When you reach that level of volume, you may have reached a level where you no longer need contract manufacturing and can cost-effectively manufacture the product on your own.

Deciding Which is Right for You: White Label Versus Private Label Products

You’ve chosen white label or private label because you want brand recognition. You don’t want to sell someone else’s brand; you want to sell your own. So when should you choose private label over White Label or vice versa?

Choose Private Label when:

• You have already designed a product
• The product that you designed is superior to any white label product offering.
• You intend to manufacture your product yourself at some point.
• You need to reduce manufacturing costs due to low volume or reduce expenses in establishing manufacturing operations.

Choose White Label When:

• You want to get to market faster
• You don’t have R&D budgets
• You have a brand demand but no product to fulfill it
• You aren’t, don’t want, or need to be an expert in this specific product.
• The White Label Choices meet Your Quality Requirements.

White Label vs Private Label vs. Reseller Services Compared:

Let’s move on to services: (or jump back to White Label vs. Private Label Products)

So, this is where it the subject of white label vs. private label, and the term loses distinction. When it comes to services, the word becomes a lot more interchangeable.

Private Label Services (Generally just referred to as Subcontracting)

A private label service is offered by a contract or third-party provider and sold under your brand name. In essence, this is straight sub-contracting or use of a subcontractor. As the buyer, you specify everything about the service – what goes in it, what processes are used, how the service is delivered, what tools are used to provide the service, what the label looks like. You can pay to have it delivered directly to your customer.

A Private Label Sub-Contracted Service example: Cable Companies: Cable companies often use private label services to install and service new customers. They hire a subcontractor who provides his own truck. The Cable Company provides the training and specifications on how the services will be provided under their brand. They set the processes and required reporting; they specify what services can or cannot be offered to the customer. The provider may even paint or label the truck, label equipment, or uniforms that the provider wears to match the service requirements of the buyer.

Reseller of Services

Contrast the above with buying services from other companies with their brand names on them.  In this case, you buy the service from the provider with their label (and brand) on it.  You then resell the service to your customers. In most cases, however, resellers of services don’t reveal the brand that delivered the services out of fear that their customer will “go around” them as a reseller and try to contract directly with the provider. This is more often than true with recurring services. As such, reselling services often creates more overhead than it saves.

Reseller example: An advertising agency that does not have the staff to perform SEO services buys SEO services from an SEO Reseller and then resells these services to an end client. The end client is fully aware of this, works directly with the provider’s staff. However, in this scenario, the end-client often wonders why they are potentially paying the advertising agency “additional” margin to use a 3^rd party and believe they can get the services more cheaply if they “go direct”. As such, they will often try to contact the 3^rd party provider directly and “cut out the middleman”. This causes stress in the relationships between the end-client and agency as well as between the agency and provider. Because of these relationship issues reselling of ongoing or recurring services where the end client knows the brand of the provider is very rare.

Hybrid Reseller Example: Similarly, an advertising agency that does not have the staff to perform SEO services buys SEO services from an SEO Reseller.  However, due to fear that their client will “cut them out,” they don’t let the SEO reseller have any direct contact with the end client.  So, the advertising agency then delivers those services under their own brand name. The benefits they could gain from reselling the services are lost in this hybrid model as they now have to act as the communication “go-between” between the end client and the provider. This can and does naturally cause communication issues, service delays, and degrades the quality of service.

White Label Services:

A white label service is offered by a contract or third-party provider and sold under your brand name. As the buyer, you ONLY specify what the label looks like. In this case, the provider is already an expert in providing the service you want, and they provide the same service under other brand names. They therefor have likely created systems, processes, and tools to deliver the service expertly. The provider specifies what’s delivered, how it’s delivered, the communication platforms, the reports, and the standards for the services to be provided. Great care is taken to ensure that the end client never learns that the service provider exists. For all intents and purposes, the end client believes that your brand is providing the service.

A White Label Service Example: That! Company is an example of a White Label Digital Marketing Company. An Advertising agency, web development agency, or small digital marketing agency hires That! Company to provide one or all their various services to an end client. That! Company having serviced digital clients since 2007 has developed extensive technology, processes, and training to deliver these services on behalf of the agency partner without the end client becoming aware of That! Company’s role. Through the execution of a White Label Agreement, all these non-disclosures are codified in writing. The agency bills the end client directly, while the experts from That! Company interacts directly with the end client under the agency’s brand. The agency appears to deliver the service, their customers are happy, and everyone lives happily ever after!

Benefits:

• You don’t have to be an expert
• You don’t have to design processes or provide training.
• Superior model to reselling or hybrid reselling.
• Often less expensive than Private Label
• You get brand recognition

Drawbacks:

• You choose an existing service but don’t control or specify service offerings, but many white label companies offer a wide range of choices to meet your needs.

Why Can Private Label Services Be More Expensive Than White Label Services?

Simply put, service delivery efficiency. Because private label services are wholly specified by you, the provider must build service processes or systems that are only used to create and deliver your services.  While there may be similarities between your service and another similar service they provide, your service is uniquely yours (exclusive). Those changes to the services processes cause an increase in costs that are passed on to you.

In the case of white label, you lose exclusivity, meaning the provider can produce the same service for you and others, while all that changes is the label. However, this is usually a benefit, unlike products, services are outcome-based and have a provider who has built tried and true processes to deliver those outcomes is generally desirable. Because the provider can produce the same service repeatedly for multiple customers, those efficiencies are shared with you and other buyers and the resulting reduced costs are passed on to you. Learn about White Label Pricing.

This is, of course, can change if you have enough volume to offset these cost factors. When you reach that level of volume, you may have reached a level where you no longer need contract service providers and can cost-effectively hire your own staff to deliver the service(s) on your own.

Deciding Which is Right for You: White Label vs Private Label Services

You’ve chosen white label or private label because you want brand recognition. You don’t want to sell someone else’s brand; you want to sell your own. So when should you choose private label over White Label or vice versa?

Choose Private Label Services when:

• You have already designed a very specific service offer
• The service that you created is superior to any white label service offering.
• You need to reduce labor costs due to low volume.

Choose White Label Services When:

• You want to get to market faster
• You don’t want to design the services processes
• You have a brand demand but no service to fulfill it
• You aren’t, don’t want, or need to be an expert in this specific service.
• You want to reduce overhead labor costs due to low volume.
• The White Label Choices meet Your Quality Requirements.

Not All White Label Digital Marketing Providers Are the Same.

Now that you’ve learned the difference between white label vs. private label, you should know that not all white label providers are created equally, and not all white label providers provide white label services at all. In fact, to accurately provide white label services, they must invest in and build specific technology to prevent their brand from being accidentally revealed to your customer.

Ask these questions:

1. Do they provide branded Caller ID so that they can call your customers directly, and receive calls from your customers through your phone number? – If not, then they are a hybrid reseller, not a white label provider.
2. Do they just sell a software solution but let you do all or most of the client interaction? – If so, they are a hybrid reseller with white label software.
3. Do they provide a dashboard under your domain name that cannot be tracked back to them? – If not, they aren’t a GOOD white label provider.
4. Do they provide sales support, meaning do they get on calls with your prospects and help you close deals? – If not, they aren’t the best White Label Marketing provider.