Is this your best price?

When companies are asked about price strategy, a majority is able to explain perfectly fine why specific rates are set. Different strategies for different products or services have been introduced over the years and proven to be successful or not in specific contexts and markets. Mostly the age of a product (or company) and the extent of relevant competition is decisive for which path to choose. For a buying customer it is very important to recognise which strategy a supplier is using and what this implies for future purchases.

In the scope of marketing (high-end) technology equipment, many people familiar with the business can relate to a rather high level of pricing. It’s not about production cost only. There is research and development, environmental contribution, sustainability, compatibility & interoperability and marketing strategy involved, but above all there is the indispensible obligation to deliver an impeccable after-sales service.

Looking into the rémarketing of said equipment, perspectives change. And to be fairly honest, they change rightly so. After all, there is no more R&D involved, the product is finished and in many cases proven to be working already, the interoperability is inherent to the product itself and the market position is maintained by the manufacturer. So price should be king, right?

Price is -and always will be- the number one reason for people to source from the circular economy, so yes: price is king! Nevertheless it is important to recognise market penetration strategies and economy pricing from long term strategic based product rates.

The biggest strength of a successful supplier of refurbished equipment, is creating a fine balance between buying price from initial owners and selling price to end users. Squeezing out selling customers will destroy the equilibrium and preclude independent distributors from building a solid base of input, which is necessary to maintain an effective supply chain and decent warranty system.

Electrostatic discharge (ESD)

Where R&D is a significant part of price setting for new products, state of the art refurbishing of electronic equipment takes specialised handling (& testing) processes. There is a constant need for upgrades and investments, keeping test labs compatible with the market availability of products.

Reducing their business model to basic box-moving, individual brokers are able to go deep in price, but RMA rates will be inversely proportional. A single electrostatic discharge from a person’s body for example, may induce irrevocable damage to an electronic product while packing. This damage can be fatal or microscopical, not harming the general functioning of the regarding device, but significantly reducing its lifetime, which is even worse in some cases.

The cheapest price vs. the best price

When there is a recurring need for parts, the customer-supplier relationship should always be one of trust and trust is to be earned. Full transparency on margin or price is tricky, but full transparency on price strategy is not. Even though a good buyer will recognise a bargain when he sees one, it is advisable to be critical towards dumping rates. In the circular economy of network- and datacenter equipment it’s all about availability and when there’s a significantly newer technology available, there will be price drops to only a fraction of list price on ‘outdated’ devices. Still, there should be a cost involved to assure good working condition and replacement warranty.

From supplier’s perspective, “Is this your best price?”, indicates the prospect or customer does not consider you a trusted partner yet and there’s probably some lack of information regarding the added value of your offer. A fair price may or may not be negotiable, but a customer’s request for assistance to win a deal or to match a set budget, is what will lead towards the best solution more effectively than just to demand a lower price.

“Is this my best price?” It probably is, following our sales- and business strategy. “Can we talk about price?” I would be more than happy to. The more I know about the context of your enquiry, the more leverage I have for the indirect stakeholders to match your financial needs ánd to keep the previously mentioned balance intact.

A different kind of technology supply

Even though environmental awareness in general will always be unfinished business, most industries have already successfully created several, often very admirable initiatives as a significant part of the corporate strategies. However, when money green crosses paths with nature green, priority of said initiatives quickly gets manipulated in order to facilitate financial goals.

I have been in the hardware remarketing business since the very beginning of my professional career, nearly 7 years ago. What still strikes me the most, is how many companies with a strong need for latest technologies -or just with an exceptionally large IT infrastructure for that matter- have rather limited control on their infrastructure lifecycle management.

I ran this decommissioning project for a corporate account of mine with global presence and thousands of active workplaces, ambitiously aiming for a uniform network- and telecom environment worldwide. They acquired the newest IP phones available at that time from the vendor directly and had them installed throughout all their locations worldwide. By the time they were finished doing so, procurement opened up a new tender already, because the regarding phones were about to become EOS/EOL.

By offering companies the opportunity to extend the lifetime of the technological environment they need, we participate in the circular economy of products and have direct impact on the industry’s footprint and sustainability.

To revert to my opening statement, I think it’s safe to say that the world’s leading vendors in our industry value environmental counsciousness highly when developing new features and innovations and they will probably keep doing so in the future as well. Aware of the competition of the well established refurbished market, the industry’s manufacturers (rather lately) decided to adopt this market segment themselves too together with their partners, trying to indoctrinate the clientele into working with certified refurbished products only, instead of these of ‘unauthorised’ resellers. A recent article I found on this particular approach of partner distribution, you can find here:

Know what you are buying – Buy genuine

Independent Resellers vs. Dependent distribution

As an ‘unauthorised’ reseller, I’d like to zoom in on a few things mentioned in this article, starting with the usage of the term ‘unauthorised reseller’:

By refurbishing used equipment from companies with a strong need for the latest technology, we actively participate in reducing the global ICT industry’s footprint by relocating working products instead of throwing them away. We are capable of doing this, because these large IT users are often pushed by vendors to renew, while in fact the actual lifetime of a product could be way longer. Especially for companies with a smaller need of the latest technologies, like the one mentioned here before.

Taking the first sale doctrine into account, the concept of remarketing could be simplified to buying products from a first party, adding value of warranty and selling said products to a second party. It is a simple and legit business agreement and thus authorised by law. Therefore, I prefer the term ‘independent reseller’.

While thinking about it, we might as well introduce ‘depending’ resellers for the regular chain, as these ‘authorised’ resellers literally depend on the price –read profit– strategy of the vendors. At the same time, in this so called grey market of ours, specialized traders are constantly looking for the best fit in between an end user’s need and his regarding budget, matching the market’s organically existing demand & supply.

Next, Taute refers to an increased risk of counterfeit and losing out on quality and service, while just as in regular distribution there are plenty of quality labels available in the independent industry to verify a product’s quality or a company’s best practices. It’s just as easy to check references and request audits.

I do agree with Taute on being careful in sourcing, as there is a huge presence of one-man-shows not capable of offering any warranties on the products they sell heavily underpriced.

However, these frauds are just as little affiliated with the professional independent market we are in, as they are with the regular distribution.

“Know what you are buying – Buy smart”

What we advise all our customers to do, is to buy smart: What do you really need to buy new with support, and for which part of your IT procurement can you control your budget and participate in the circular economy?