When does a $500 purchase cost you $12000 + ?

A Value Driven Challenge - Case Analysis

We recently worked on a quotation for a client who was looking to replace a fleet of printers.  They had been using a particular brand which is well known and they had researched a potential replacement model. The question put to us? "Can you give me a quote for X model of printer?  We're going to need Y number of them."

Now this is the kind of question that every sales driven organization loves.  And most would simply have looked for the current price on that printer and sent it off quickly hoping to get the order right away. 

At Leppert we take a slightly different approach. 

We asked a few more questions, determined that there was no compelling requirement for the printer to be exactly that model or brand.  Their request was simply driven by, "we have used them before and we are comfortable that they last well and work ok."  Nothing wrong with that assessment, right?  On the surface it is a great way to go.

We took some further steps in putting our quotation together for the client.  We got the pricing for the volume they needed on the model they had chosen from Brand A.  We then took the extra step of checking Brand B for a competitive model with similar capabilities and similar specs.  We contacted the sales team for Brand B and asked if they might be interested in putting a volume purchase price together for the client...as a way to give them better value from their purchase. We then repeated this process with Brand C, one which often has a higher capital cost, but usually offers better operating costs as an offset.  All well and good.  We now had three options for the client...their original request, two alternatives with different pricing.  We could now send them three choices.

One final step was important to finish it off before submitting the quotation to the client. We took the time to figure out the True Total Cost of Ownership (TCO) for the printers over a projected life cycle.  This is where the $500 purchase started to turn into a $12,000 question.  Based upon the costs and yield of toner for each of the three units, coupled with the amortization of the printers over a reasonable projected lifespan, and using two levels of potential average volume, we projected the project's TCO for each of the three choices. 

This is where the real value in our work came through.  One option showed over $12,000 in net savings, all costs in, over the orginally requested model and Brand (A).  A second showed a marginally greater amount of savings on one volume scenario, which reversed between Brands B and C in the lower volume scenario. 

So which is the right choice for the client?

That is a question which our quotation clearly places back in the hands of the client.  Their initial assessment of their needs may lead them to still go with Brand A.  However in doing so they also now know that choosing either of Brands B or C could show significant cost savings with no loss of performance.  The importance of this saving potential is theirs to assess.  The added Value that we have brought to the discussion is that they make their decision armed with a better understanding of what the impact of their $500 purchase will be.

Did we go too far?  We don't think so.  It is our corporate commitment to our clients that drives this extra effort...we should always go the extra step to ensure they get best value from what they purchase.