Suppliers artificially inflating prices

[Shez]

I had a demo the other day of an all in one 15" speaker cab that was battery powered, with two radio mic receivers, SD/USB playback facilities, two wired mic inputs, built-in wheels, carry handle etc. Nicely thought out but obviously built to a price. Performance wasn't great. They apparently sell well to education - I can see it being useful in that context. I was told price was around the £600 mark.

 

Just received a flyer from another of my regular education suppliers, also selling that same item for £599, claimed to be a 1/2 price introductory offer. An RRP of £1200 then?

 

A quick google shows a raft of DJ suppliers selling the exact same item for about £260.

 

Am I just being naive here? Is it common for suppliers to charge what they think a particular market segment will pay, regardless of what the item actually costs? I guess that makes good business sense but when they're targeting the education market where the people who may buy such things may not know better, it seems a bit, well, immoral. Buyer beware? Fair? Thoughts?

[timsabre]

Is it common for suppliers to charge what they think a particular market segment will pay, regardless of what the item actually costs?

 

Yes. You have also got to figure how much support is going to be needed... and how long you have to wait to be paid...

[timtheenchanteruk]

sounds to be exactly the sort of thing I bought not too long ago, I also know a couple of schools who have them that bought for about twice the amount I paid.

 

I have worked in education, and a lot of suppliers have you over a barrel, because, toward the end, I was not ALLOWED to shop around, if the supplier was not on our list, or we had not used them before, you were looking at a 4-6 MONTH order time, because form had to be filled in, sent off, received, sent back, buried in soft peat for three months then used as firelighters.

 

I shopped around where I could, to get the best value, and it also meant I had more budget to play with elsewhere.

Primary schools are a prime target, orders done by one person, usually from Education Supplies R US with whatever price they feel like, but they supply everything from pencils, to musical instruments, to PA systems, and even some lighting.

[Andrew Edwards]

I'm afraid that this kind of thing happens at all and every level of public services.

 

I seem to remember a story about Government/LA paying anywhere up to 10 times more than the private sector for IT equipment and web services for example.

 

'Edu supplies R US' type places seem like a good idea; bulk the buy the best deals and then spread that saving across all the schools etc. In reality it is nothing short of daylight robbery for many of the items. As you say, Polly Purchasing (probably Sally Secretary anyway) may not know any better. I would have thought it has improved in more recent times now that it is easier and quicker to check online for the best prices or to see if your usual supplier is being fair.

 

Not being allowed to shop around by a public institution providing education is insane. It is just a prime example of the waste that is now being discovered now that everyone has to tighten their belts.

 

Some suppliers play some great games by offering free stuff with the order...therefore providing an incentive to the person filling out the paperwork to stick with someone in order to get free stuff. It's 'off-books' so they do not feel guilty about keeping it themselves. It's basically a kickback.

 

I'll stop now...

[paulears]

When I first went to my college, everything was purchased through ESPO - you can browse the online catalogue. Frequently, prices are 'list' and are all ex-VAT. Often the local full price item including VAT was around this figure at those expensive shops. On-line you can do much better, but ease of ordering is what they want. They don't want to spend hours searching and then as has been said doing the orders.

 

Mind you - it's a business isn't it? If your customers are happy paying the price, then both parties are happy. I sell a few items where the margin is often less than the price I pay to post it. It could be argued that making a fiver on something you sell for £40 isn't good business, and I'd love to make more - but some items are just not really worth doing, but often bring on repeat business on lines that are better, margin wise.

 

Harrods sell many of their items at considerably more than the local trader, that's good, not bad business!

[Andrew Edwards]

It's one thing inflating prices for someone who regularly shops at Harrods and something else entirely for regular public services.

 

There is a trade off between saving money against the time it takes to find that saving. I have worked for organisations who had staff specifically tasked with finding the best deal. They weren't particularly large organisations but they made significant savings enough to justify their salaries many times.

 

ESPO is in theory a great idea but they still have prices which are much higher than Amazon for example. I can only assume that they too are not always getting the best deal.

 

I agree with Shez that it is immoral to fleece a tax funded organisation.

[WiLL]

It's common especially in schools and local government where the supplier feels that the person holding the budget doesn't understand the product. i.e. if the science teacher is told to go buy some lights then the supplier rubs their hands together. That being said it does depend on the supplier.

[timd]

What's wrong with a supplier setting prices as they see fit?

[paulears]

Me too! How can it be fleecing? Everyone has internet access and could, if they wish, spend time checking prices. ESPO and similar firms are convenience suppliers.

 

So we all should shop at Tesco and Asda rather than at our local shop. A pint of milk is nearly double the price in the shop down the road than at Tesco. So are they fleecing their customers? Course not - they make more margin on essentials that people need, and this makes them viable. My wife beats me up if I buy things there because I couldn't be bothered to go where she told me. I know it's more expensive, but I don't feel ripped off?

 

I've just bought yet another hazer from a blue room member's company - He hasn't got any in stock, but could supply one in a day or two. He's charged me the lowest price of quite a few of the dealers, yet only by £5 - but I came across a couple of firms I'd never heard of before selling them for what looked like twenty quid or so cheaper - but on calling them, it was an Ex-VAT price, meaning they were actually quite a bit dearer. Fleecing customers by quoting ex-VAT? No, I don't think so, but they were getting more traffic from Google - and some people would have just bought.

 

Nobody has to buy these things - they make an offer, you decide to accept.

[David Lee]

Its a bit much to say they are fleecing the LGAs etc. When I started in this business I worked for a supplier of kit to schools. We would provide good quality kit - Zero 88, Pulsar and Strand and we would be around to help them use it and still be in business in a few years time when they needed help with it. Also, we were local and could be on site quickly. This all costs.

[Shez]

Don't get me started on ESPO... In order to supply goods and services to the city council here, you have to do it through ESPO, which involves filling in an inordinate amount of paperwork. ESPO skim 5% off the top of all invoices, consequently, some suppliers charge a bit more in order to cover that premium plus admin. So it costs the council more to procure through ESPO than it would if they went direct. I could say a lot more on that particular topic but better bite my tongue on a public forum.

[woody2]

nothing new, one of the large suppliers to the public sector buys there stock from a high street retailer, as its cheaper than buying trade :** laughs out loud **:

[Andrew C]

Whilst I whole heartedly agree that some educational pricing is criminal, I've just come across the following comment in a CLEAPSS document:-

 

Although employers have the duty to see that items of work equipment used by their employees are safe and

suitable for the intended purpose, in a school or department with a delegated budget, those spending that

budget must see that the items selected meet those criteria (so far as can be ascertained). One way of doing

that is to select items from a supplier specialising in educational equipment. It might be much cheaper to pop

round to the local discount store for a new sewing machine, food mixer or hammer but the purchaser would

then have to find evidence to suggest that the item purchased was safe enough for use at a place of work

and suitable for educational purposes. Small lightweight machines intended for home use are unlikely to be

suitable for use in a school. Guarding may be inadequate and arrangements for the power

 

So, you pay your money, and take your chances... ?

[Junior8]

Am I just being naive here? Is it common for suppliers to charge what they think a particular market segment will pay, regardless of what the item actually costs? I guess that makes good business sense but when they're targeting the education market where the people who may buy such things may not know better, it seems a bit, well, immoral. Buyer beware? Fair? Thoughts?

 

My church has just had a new audio system installed at what I consider to be eye-watering prices, but that's par for the course I'm afraid. People in the congregation with specialist knowledge are routinely ignored while top money is spent with 'that nice man' from, well, wherever he's from. I don't blame the suppliers I blame the buyers. When I was in education the usual approach was to get on the approved suppliers list bu promising a discount on all purchases, which was of course added to the list price margin! If you were prepared to make a fuss and had enough status in the school you could shop around - and I did - but often the supplier was put off by a) having to go through some form of screening first and b) lengthy payment times. The best deal I ever did was with a firm who badly wanted to get on the list and we were the first customers. What really got my goat was that I was not allowed to buy small consumables out of petty cash from retailers not VAT registered because the county could not claim back the VAT ignoring the fact that I was saving them considerable sums over and above what was reclaimable.