Are Buyers Really Obsessed With Price?
As a salesperson it is easy to assume that buyers are obsessed with price, or more to the point getting the lowest price. But is that really true? Is it perhaps too easy to blame our sales failures on an unreasonable buyer obsession with price? Well, let’s ask buyers and in particular public sectors buyers.
Price Is Not The Only Factor
Let’s start with a statement of the obvious: ‘The main aim of national policy on procurement is to achieve value for money, having regard to probity and accountability’. That is a quote directly from a public sector controller and auditor general.
But, far from an obsession with price, the same source continues: ‘While price is very important in determining value for money outcomes in procurement and for certain categories of purchases in particular, it is not the only variable that needs to be considered.’
Encompassing Non-Cost Factors
‘Value for money also encompasses non-cost factors.’ So, as the guidebook on public sector buying explains: ‘When making purchases of goods or services consideration should be given to whether:
- they are fit for the purpose for which they are intended,
- the goods or services provided are of sufficient quality
- the level of service or support provided meets the requirements’.
But, what exactly is price?
In considering the issue of price buyers are clearly told to consider the ‘whole-of-life and transaction costs associated with acquiring, using, holding, maintaining and disposing of the goods or services’. That is a total cost of ownership checklist that any seller should be aware of.
Just What Is Value for Money?
To sum it up, value for money in procurement is ‘the optimum combination of whole-life costs and/or price, where appropriate, and quality (or fitness for purpose) to meet the user’s requirements’. That is good news for sellers and hardly amounts to a buyer obsession with price!