“What is your ‘list price’ for this used IBM Server?”
We get this type of question pretty frequently, particularly when
we’re selling to a large Fortune 500 Corporation, University or
Government Organization. It is almost a knee-jerk reaction to ask as
these buyers are conditioned to negotiate discounting directly with
manufacturers such as Sun, IBM, and HP. We also get similar questions
regarding “educational” or “volume discounts.”
While used IT hardware is a fantastic way to save on IT
infrastructure costs, negotiating pricing here can present some unique
challenges.
The Secondary IT Industry and price markers:
The used IT hardware industry is essentially an open market. Hardware is
traded as a second-hand commodity that can rise or fall depending on
perceived availability in the marketplace. List pricing would be
impossible to set without collusion by the dozens of dealers who operate
in this niche marketplace. This is obviously bad for consumers and a
sure date with the Feds for those involved, due to the price-fixing
implications.
So, what can an IT buyer use as a price marker? The best alternative
would be the manufacturer’s list price. Unfortunately, this can also be
cloudy in cases where the manufacturer has discontinued a product and no
longer offers the product and/or pricing. In most cases, we can help
the buyer find the last published list price though. Discounts typically
range between 30-80% off of list depending on the product and its
availability.
Education Discounts:
Vibrant definitely supports education and does its best to discount
pricing for universities (and in particular for students that need a
system to learn on), but we don’t have an across-the-board education
discount. We offer very competitive prices for all of our clients, and
if we’re only making 3% on a sale already, it is very difficult to
discount that further below our cost. We just do our best on a case by
case basis.
Volume Discounts:
This can get interesting. In the majority of cases we can offer a
volume discount if more than a couple of items are to be procured. In
some cases, though, more product can mean we actually have to charge
more. I realize that this seems counter-intuitive, but let me explain…
Let’s say for example that five products had been quoted at a set
price, $1000 each. Then, the client comes back with a surprise. They’ve
decided to purchase five units for each of their 10 branch locations.
But let’s say that we only have 10 of the item in stock and we know that
our cost to acquire 40 more on the wholesale market is now $1500 each
due to upward price pressures. Since we don’t manufacture the product,
unfortunately, we can’t just make more of it. As you can see, this is a
difficult situation because the client is surely hoping for a volume
discount and we will have to increase our price just to break even.
We’ll offer to supply our stock at the discounted price and then offer
the additional available items at our cost to help our client, but it’s
never a fun scenario.
Nonetheless, if you’re working with us, you’ll find we’ll always do
what we can to discount to meet your expectations. We want to work with
our clients for the long run and we’ll do the best we can. Don’t
hesitate to ask us to beat a price or consider a discount where
appropriate.