“You get what you pay for” – fact or a procurement myth?

What does the price you agree with a supplier represent?

When it comes to the sort of goods and service many procurement people buy regularly, that’s a more difficult question to answer than it first appears. Here are some options.

  • Is it purely and simply the reflection of whatever you agree between you?
  • Does it reflect the actual cost to the supplier of the component parts of the final product you’re buying?
  • Is it whatever price is needed to allow you to sell on the goods at a given profit or contribute towards your final required selling price?
  • Or is it defined by this mysterious “market” we like to talk about?

So within the apparently simple question, we can unpack a whole set of issues around competition, markets, negotiation, use of cost breakdowns ...

You might also see an immediate relevance to the horsemeat scandal. How much of it is caused, at least in part, by buyers demanding a certain price point? Do those buyers know or indeed care, whether that price point is feasible in terms of allowing producers to make a product (and a profit) without resorting to dodgy means?  Or is that a red herring in terms of the real causes? Suppliers can simply be greedy even where profits are good.

Anyway, these topics and more will be covered by Guy Allen in the first of this year’s BravoSolution Real World Sourcing Series events, starting at 11 am on February 27th at the Jameson Room, Bentley's Restaurant, 11 Swallow Street, London W1B 4DG.

You get what you pay for” is the title and Guy will be getting into approaches to how prices are set and agreed, negotiation, cost modelling and similar issues, all directly applicable to everyone involved in negotiation and contracting. Whilst that focus is highly relevant to the private sector, I would stress that public sector folk will also find much of relevance. Even if your initial prices are set via EU tenders, the points that will be covered are highly relevant to tender evaluation principles and to the post contract award discussions that we inevitably see in major contracts, even in the regulated sectors.

I’ve seen some of Guy’s material and it promises to be a very interesting, worthwhile and perhaps at times controversial session.  If you haven’t been to one of the events before, they really are very enjoyable, as well as useful and stimulating. We’ve got a few places left for the event, and  you can book here. For just £49, you get an excellent lunch and a chance to network with a group of your peers as well as the hard content – that must be a bargain.

( Or is it? How do we know...!)

Or you can book for all six Real World Sourcing sessions here...

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