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Many organizations exploring IT services often face the VAR vs MSP decision. While both aim for customer satisfaction and act as technology partners, they differ in delivery models, pricing, responsibilities, and client engagement.
Understanding the difference between a Value-Added Reseller (VAR) and a Managed Service Provider (MSP) is critical for informed decision-making, strategic partnerships, and driving long-term competitive advantage.
Key Takeaways:
- VARs focus on product resale with added value services, while MSPs deliver ongoing managed support and monitoring.
- Revenue models differ significantly, with MSPs relying on recurring subscriptions and SLAs.
- VARs need strong vendor partnerships,whereasMSP success depends on service delivery capability.
- Customer engagement styles diverge, with VARs being transaction-driven and MSPs relationship-driven.
- Many hybrid businessesemergeby combining VAR resale strengths with MSP recurring service offerings.
What is a Value-Added Reseller (VAR)?
A VAR enhances third-party products, typically hardware or software, through customization, integration, training, or consultation, and resells them as a complete solution to the end user. They serve as a one-stop shop by bundling products with services such as installation, onboarding, and post-sale support.
Key Characteristics of VARs
- Acquire products at a discount from vendors and resell them at a profit.
- Deliver customized solutions often involving hardware, software, or both.
- Offer consulting, training, onboarding, and implementation services.
- Commonly serve large enterprises and B2B clients that require tailored infrastructure or software packages.
- Frequently focus on particular industries, such as manufacturing, healthcare, or education.
Revenue Model
VARs generate revenue through multiple channels:
- Product margin: Purchasing from vendors/distributors at a discounted rate (often 15-25%) and reselling with a markup.
- Professional services: Customization, consultation, and onboarding services add value to core products.
- License administration: Software-as-a-service (SaaS) license sales and renewals provide a consistent source of income.
- Maintenance contracts: Some VARs offer ongoing support or extended warranties, contributing to recurring revenue.
This model enables VARs to deliver both tangible products and personalized services that address specific business challenges.
Pro Tip:
Bundle hardware resale with managed offerings to increase lifetime value and reduce revenue volatility.
Level of Involvement
VAR involvement is typically event-driven and transactional. Engagement occurs around key project milestones such as:
- New system installations
- Technology migrations
- Hardware upgrades
- Training sessions for end users
While some VARs maintain post-sale relationships, their role is generally limited to the project scope unless extended through support agreements.
Where VARs fall short
- Inconsistent post-project support: Support can become inconsistent once a project wraps, since the engagement is often scoped to a specific rollout.
- Parts and troubleshooting dependency: Customers may become dependent on the VAR for parts availability and vendor-specific troubleshooting.
- Limited scalability: Heavily customized setups can be harder to scale during future upgrades.
What is a Managed Service Provider (MSP)?
An MSP delivers ongoing management, monitoring, and protection of a client’s IT systems, often through remote infrastructure. MSPs provide consistent support for cloud systems, networks, and endpoints to prevent downtime and ensure operational continuity.
Unlike the project-based nature of traditional VAR engagements, managed services create an ongoing revenue model. The U.S. managed services market is projected to reach $705.22 billion by 2031, growing at a CAGR of 8.9% from 2026 to 2031.
Key Characteristics of MSPs
- Operate on a subscription-based model, providing predictable monthly costs.
- Offer a wide range of services, including help desk support, disaster recovery, endpoint management, and more.
- Establish formal Service Level Agreements (SLAs) to guarantee performance and availability.
- Act as strategic IT partners, often advising on technology planning and implementation.
- Frequently work with SMBs that lack extensive in-house IT capabilities.
Revenue Model
MSPs rely on a recurring revenue model:
- Clients subscribe to a bundle of services based on usage, infrastructure needs, or employee count.
- Monthly billing ensures cost stability for the client and steady revenue for the MSP.
- Some MSPs offer tiered service levels, providing flexibility and incentive for clients to scale services as they grow.
This model is especially attractive for small to mid-sized businesses that prioritize uptime, support availability, and cost control.
This shift is common enough that it has its own pattern: as SaaS and cloud adoption grew, many VARs facing thinner product margins began layering in managed services to build more predictable, recurring revenue, rather than staying purely transactional. For VARs considering this transition, moving from VAR to MSP requires changes to service delivery, pricing, staffing, and customer relationships.
Level of Involvement
MSPs are highly involved in their clients’ day-to-day operations. They typically:
- Maintain regular communication through daily monitoring and incident resolution.
- Provide strategic guidance on software upgrades, cloud migration, and security planning.
- Build long-term partnerships, often functioning as an extension of the client’s internal team.
MSPs are ideal for organizations that require ongoing protection, support, and system optimization across their digital infrastructure.
Where MSPs fall short
- Less customization: MSP solutions tend to be more standardized than a VAR’s custom builds, which may not suit businesses with unusual or highly specific requirements.
- Potential vendor lock-in: Switching MSPs can be difficult once a business becomes dependent on the provider’s tools, processes, and systems.
- Less control: Businesses may have less direct control over how their IT environment is managed, since day-to-day decisions and changes are handled by the MSP.
Key Comparisons: VARs vs MSPs
Strategic Considerations: VARs vs MSPs
When evaluating your options, consider the following factors:
- Vendor Relationships: VARs often act as intermediaries between software/hardware vendors and end users. MSPs may also rely on vendor technologies, but are more focused on service delivery than product resale.
- Distribution and Partnerships: VARs build relationships with manufacturers and distributors to gain better pricing and access to new products. MSPs, on the other hand, often build partnerships around SaaS, cloud platforms, and IT service providers.
- Onboarding and Training: VARs provide essential onboarding and training during product rollouts, while MSPs continuously train end users as part of their support model.
- Customer Satisfaction: Both VARs and MSPs prioritize satisfaction, but MSPs have more touchpoints to influence client perception positively through ongoing service and communication.
Pro Tip:
Analyze your customer base to identify which segments are ready to transition to recurring, managed services.
Conclusion: Choosing the Right Partner for Your Business
Whether you choose a VAR or MSP, your selection should align with your operational goals, internal capabilities, and budget constraints.
- A VAR is an excellent choice if your organization needs custom-built technology solutions, vendor-specific software, or system integrations tailored to unique workflows.
- An MSP is ideal if you need comprehensive, ongoing IT support that evolves with your business and provides full-time protection, performance monitoring, and cloud-enabled scalability.
The VAR vs. MSP decision ultimately reflects how your organization wants to manage technology, whether through custom solutions at a project level or through scalable support that grows with you.
If you are a B2B eCommerce VAR looking to expand your portfolio with comprehensive MSP services, VARStreet is your partner of choice. Our robust eCommerce platform empowers you to seamlessly integrate value-added reselling with full-scale managed IT support, delivering the best of both worlds to your clients.
Contact VARStreet today to learn how we can transform your service offerings and fuel your competitive advantage in today’s digital marketplace.
FAQs
Can a business switch from working with a VAR to working with an MSP, or vice versa?
Yes, and it happens fairly often as a business’s needs change. A company that started with a VAR for initial setup and hardware might later bring in an MSP once ongoing management becomes the priority, and the reverse can happen if a business decides it needs a major infrastructure overhaul that goes beyond routine support.
Do VARs or MSPs typically require long-term contracts?
VARs are usually more flexible here since engagements are often tied to a specific project rather than a fixed term. MSPs typically require a contract, often annual, since their pricing and staffing model depends on predictable, ongoing revenue.
How do VARs and MSPs handle emergency or after-hours support differently?
MSPs generally build 24/7 monitoring and emergency response into their service agreements as a core offering, since that’s part of what the subscription pays for. VARs typically don’t include this by default; after-hours support usually has to be negotiated separately or isn’t available at all once a project has wrapped.
Is it more expensive to use both a VAR and an MSP than just one?
Not necessarily. Since they serve different functions- product resale and customization versus ongoing management- many businesses use both without much overlap in cost. The bigger risk is redundancy: paying two providers for services that actually cover the same ground, which is worth checking for during vendor selection.
What happens if a VAR goes out of business or discontinues support for a product they sold you?
This is a real risk with VARs, since your ongoing support tends to depend on that specific company staying operational and maintaining its vendor relationships. It’s worth asking upfront how a VAR handles this, whether they have contingency plans, alternate vendor partnerships, or documentation that would let another provider pick up support if needed.
Can a small business realistically work with a VAR, or are they mainly for larger enterprises?
While VARs have traditionally served larger enterprises more often, plenty do work with smaller businesses, particularly those that need a specific, complex setup, such as a server room build-out or a specialized software rollout. It usually comes down to whether the business has a one-time, project-based need versus wanting ongoing support, in which case an MSP is often the better fit regardless of company size.
