Outsource Vs Resell – What Should a Web Developer Choose.

I have come across many of my Web Designer friends & reader audiences think hard when posed with this common question. Which is why, I was prompted to discuss this in the form of an article.

To give you more context, a lot of Web Developers, primarily the small and medium set ups, do a great job when approached by Customers to have a website designed. They have all the technical knowledge required to build an aesthetic and engaging website. However, most of them end up confused while offering the essential ancillary services required for the website to function, namely a Domain & Hosting Package.

outsourcing vs reselling

Some people I know prefer taking the outsource route wherein they ask the Customer to approach a unique Web Service Provider such as Big Rock or GoDaddy to source services apart from Web Design for the website. As a Web Designer, you should actually consider if following the outsource method is in your best interest?

Since this topic has a lot to discuss, and keeping in mind the average readers attention span, I am going to divide this article into a 3 Part Series which will help you decide whether you should OutSource your Web Service needs, or Resell.

So let’s start with the most popular one: Outsource

Advantages:

1.)    No technical support responsibility – Once you have passed on a customer to a good service provider, you don’t have to worry about helping him set up his Domain and Hosting package. Your responsibility ends as soon as the site has been developed. The customer will need to approach the service provider for any help related to the domain or hosting package

2.)    No Hosting knowledge required – This allows you to focus on your core expertise and let an external service provider handle everything from the backup, to uploading content, setting up email accounts etc. By focusing on your primary business, you can make it more profitable and avoid needless hassles with constant requests for help or support from your customer.

3.)    Better Product Portfolio – End customer providers such as Big Rock and GoDaddy offer their customers a range of additional services to choose from. Integrating all these options into your own offerings could be time consuming and hard to maintain. This way, you can simply pass a client on to a reliable provider that can meet all his needs

4.)    Referral Amount – Some major service providers offer an affiliate program or a referral scheme. For every client you pass on to them, you could receive a percentage of their spending or a flat fee. This is a very useful addition to your income and benefits you in all ways. The service provider will be happy to receive clients, and you get paid for every referral you send their way.

5.)    Better Management – End customer providers are dedicated to selling and managing Domain Names and Hosting packages along with related products. They are capable of responding to and dealing with any and all queries in a quick and professional manner. You can be confident your customers will be well taken care of.

 

Disadvantages:

1.)     Zero Annuity – A lot of the websites you’ll typically design are for Small and Medium businesses. As such, they are quite basic pages that won’t require much modification in the future. In this, case, you are restricting your potential sources of revenue by only offering one service which has a low chance of providing you with constant income. If you choose to provide your customers with the Domain Name and Hosting, then they may renew it with you, in effect increasing your revenue channel.

2.)    Business Grabbing – Since Web Service providers maintain such a huge selection of products, the chances of them also offering Web Development services are very high. In this case, a customer may choose to place further orders for web development directly with the service providers and by pass you completely.

3.)    Zero Brand Recall – When you outsource, you are decreasing your brand value. The Web Service Provider has his branding all over, right from the control panel, to their mails; every step of the way, the provider highlights his brand. Since you’re only offering them one service, the chance that a customer would remember you and return for business decreases.

4.)    Loss of Potential Business – Web service providers spend large amounts on a variety of marketing activities already. A key marketing tool for Web Designers/Developers however is word of mouth. If you only offer one single service, this decreases your value proposition to a new customer. A customer looking for more convenience would go to someone who could handle everything from the purchase of the Domain name and Hosting to setting it up.

5.)    Better Pricing – Since Web Services Providers acquire most of their products in bulk and operate at a vast scale;their capital and operational costs are lower. They tend to pass these benefits on to consumers as they transact in volume. ResellerClub for instance follows the resell model. Since they operate on a large scale these guys pass on the benefit of price to Web Developers, which the Web Developer can then choose to pass on to his Customer.

These points help explain the Good & Bad of Out Sourcing. My next article will talk about Reselling, and the Good and Bad attached to that method.

In the meanwhile I would love to hear what you’ll think about Out Sourcing and what methods do you’ll currently follow.