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Should you Pay Your Preferred Vendor More Than the Market Will Bear?

July 22, 2013

As I sometimes like to do, I am writing this blog post based on a search phrase that brought a visitor to it. Today’s phrase is “working with preferred vendors even if their prices are higher than” and it got cutoff from there. I suspect the goal is to find out more about working with preferred vendors even if their prices are higher than those you’d pay, elsewhere.

If the question is whether you should pay more for services because they come from your preferred vendor, the answer remains with your company to answer. Consider this: many times, preferred vendors don’t have all the specialty services available that a customer needs. LIMS and ELN services are a couple good examples of this. Thus, when it comes time to find someone to provide you with SampleManager, LabWare LIMS, or the Accelrys Symyx product, the preferred vendor either has contacts for those items or, more likely, does a Google search or trolls through something like LinkedIn to find someone.

It is right about this point where the reader might be a little surprised and start to think they could do this, themself. Actually, you really could do this, yourself. The reader will realize they are paying someone quite a markup to do something they could do, themself. This is absolutely true. However, if you are absolutely required to go through your preferred vendor, you won’t save yourself any money by finding someone on your own. Also, it assumes you could take the time to do this. Ironically, while you might not have the time to do this, the customers, themselves sometimes have as many resources to find people as the preferred vendors do.

Here is an example situation: my company, GeoMetrick Enterprises, works with customers and sells it services for X number of dollars. If your company has a preferred vendor program and a rule that says that you can only use your preferred vendor, then your preferred vendor might contact my company. Then, GeoMetrick Enterprises still gets its X number of dollars for the project but the preferred vendor has to make something on it, too, to justify their time and effort, so you will pay X + Y dollars for this. You do pay more for the services.

Why Pay More?
At this point, the reader might wonder why their project should pay more for services they could have gotten on their own? After all, the services are worth the same amount before the additional markup, so they are merely being charged at a higher rate for the same services. Additionally, if there are several levels of subcontracting, the markup is done several times.

The reason is this: Because you have to. It’s your company’s rule and you don’t have a choice. Your company does this in an attempt to save on overall services. They might achieve this goal based on the fact that they get some kind of deal on the management of the network and support for more common services. The company might actually benefit, overall, even though your project does not.

Gloria Metrick
GeoMetrick Enterprises
http://www.GeoMetrick.com/

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