If you’re an MSP, SaaS reseller, or tech entrepreneur exploring white label VPN offerings, you’ve already mastered the basics. You know what a VPN is, why encryption matters, and how remote access transforms workflows. Now it’s time to get granular: what will it really cost you to run this service under your own brand?
Skimp on the details—licensing fees, gateway bandwidth, branding services, support overhead, compliance audits, payment processing, marketing budgets—and you’ll discover invisible drains on your margin. This guide walks through every line item you need in your VPN Total Cost of Ownership (TCO) calculator, so you can lock in profitability from day one.
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Why TCO Matters for White Label VPNs
White label VPNs remove the multi-million-dollar burden of building your own servers, clients, and backend. Yet “no capex” does not equal “all profit.” Your TCO spans:
Onboarding & Branding
- Recurring Licensing
- Bandwidth & Gateway Charges
- Support & Operations
- Compliance & Insurance
- Payment Processing
- Customer Acquisition (CAC)
A solid TCO model predicts your break-even point, guides your per-user pricing, and helps you stress-test worst-case scenarios (e.g., 10 GB/user/month transfer). Let’s unpack each component.
1. Onboarding & Setup Fees
Pro Tip: Clarify what “branding” entails. Does it include in-app text changes, custom domain SSL certs, or just a logo swap?
2. Recurring Licensing Models
Vendors tend to bill in one of two ways:
*Per Active User
*
E.g., $3–$5/user/month
Scales linearly with your user count
*Revenue-Share
*
You keep 60–80% of your retail price
Vendor takes a cut on every subscription
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Example: 100 users, $15/user sell price
users: 100
sell_price: 15
revenue_share: 0.75
Your licensing cost if rev-share:
license_cost = users * sell_price * (1 - revenue_share)
Either way, forecast your Year 1 and Year 2 volumes. Churn, upsells, and seat growth all affect this number.
3. VPN Gateway & Bandwidth Pricing
You don’t host servers, but you pay for the data your users tunnel:
Bundled Bandwidth: Flat fee for up to X TB/month
Pay-Per-GB: $0.05–$0.20 per GB
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Scenario A: 5 TB bundled = $1,000/mo
Scenario B: 10 GB/user * 100 users * $0.10/GB = $100/mo
Streaming video, large file syncs, and corporate data transfers can spike usage. Always plug worst-case GB/user values into your TCO calculator.
4. Branding & Custom Development
White label is about your identity, not the vendor’s. After basic theming, you might need:
Deep UI Rework ($2,000+)
API & SSO Integrations ($1,000–$3,000)
White-Label Desktop Installers ($1,000+ per OS)
Budget these as separate line items. Even “minor” custom dev can double your setup cost if you’re not careful.
5. Support & Operational Overhead
Your partner handles VPN uptime. You handle:
- Password resets
- Billing questions
- App compatibility issues
- Onboarding and offboarding users
A rule of thumb: 10–20% of monthly revenue goes to support operations. Calculate:
supportcost=monthlyrevenue∗supportratiosupport_cost = monthly_revenue * support_ratio supportcost=monthlyrevenue∗supportratio
Replace support_ratio with 0.10–0.20 based on your service levels.
6. Compliance, Security & Insurance
Handling encrypted traffic and user metadata may trigger privacy regulations:
GDPR, CCPA compliance reviews ($10K–$50K/year)
SOC 2 / ISO 27001 audits ($30K–$100K/year)
Cyber Liability Insurance ($5K–$15K/year)
Failing compliance is a hidden time bomb—one data request or breach can force refunds, fines, and reputational damage.
7. Payment Processing Fees
Every $1 you invoice on Stripe, PayPal, or Braintree costs 2–4%:
Processor
Fee
Stripe
2.9% + $0.30
PayPal
2.9% + $0.30
Braintree
2.59% + $0.49
On $1,500 MRR, that’s $45/mo at 3%. Build it into your unit economics:
netrevenue=grossrevenue∗(1−procfee)net_revenue = gross_revenue * (1 - proc_fee) netrevenue=grossrevenue∗(1−procfee)
8. Customer Acquisition Cost (CAC)
Your white label vendor won’t generate leads. CAC includes:
- Paid Ads (Google, LinkedIn)
- Content Marketing & SEO
- Referral Incentives
- Events & Sponsorships
Aim for CAC ≤ 30–40% of Year 1 revenue per user. Track:
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CAC = total_marketing_spend / new_customers_acquired
White label slashes time and risk—but only if you model TCO accurately.
Real-World MSP Example
Scenario: 100 users
License: $3–$5/user → $300–$500/mo
Bandwidth: $1–$3/user → $100–$300/mo
Support: $1–$2/user → $100–$200/mo
Payment Fees: 3% of $1,500 → $45/mo
If you sell at $15–$20/user, then:
MRR: $1,500–$2,000
Costs: $545–$1,045
Profit: $455–$955 → 30–60% margin
Add upsells (password managers, backup tools) and you can push ARPU up by 10–20%.
**Tips to Keep Your VPN TCO in Check
**Negotiate Gateway Rates: Push for volume discounts or overage caps.
Automate Support: Chatbots and self-service portals cut tickets.
Audit Quarterly: Vendor fees and usage patterns change—refresh your model.
Bundle Smart: Combine VPN with adjacent security services for higher ARPU.
Monitor Churn: Early renewal incentives can save 20%+ in CAC.
Wrapping Up
White label VPNs unlock rapid deployment and predictable infrastructure—but only if you account for every cost. From licensing and bandwidth to support headcount and compliance audits, your TCO calculator needs to include it all. Stress-test worst-case usage and build contingency buffers to safeguard margins.
Armed with this breakdown, you can choose the right partner, set competitive yet profitable pricing, and enter the booming VPN market with confidence.
Ready to see your numbers? Grab a TCO calculator template, plug in your inputs, and map your path to sustainable VPN revenue.
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