Are your customers wasting time price shopping?
By Elizabeth Hilla
Every so often, your customers may think they can find a lower price for medical products outside of distribution or with another vendor. And chances are, they’re probably right. For them, lower prices equate to unrealized savings that can add up over time and boost their bottom line. What they may not realize, however, are the hidden costs that can result from price shopping, even for just one product.
Here are three reasons why price shopping may not be the best idea for your customers:
- Not everything that glitters is gold. A different vendor may sell a similar product for less, but have your customers read the fine print on new business agreements? Products can often be sold for cheap, but that usually comes at the cost of cutting corners. Are medical supplies pre-sorted when they arrive at their destinations? Does medical equipment come pre-assembled or with adequate user training? Lower-priced vendors usually don’t offer these services at a discount or will charge extra for these benefits. If your customers end up having to do this extra work, they will likely be spending more by trying to save a few extra dollars or cents.
- Employees’ time is money. Shopping for discounts may seem like an easy way for providers to cut overhead and save money. Executives might ask employees to scour the internet for lower-priced products or even send them to brick and mortar stores to seek out bargains. But direct and indirect factors can easily cut into any gains made by finding less expensive products. Travel to and from the office requires gasoline, for example, not to mention lost wages and benefits costs accrued by employees sent to retrieve items. See if your customers are accounting for these personnel costs when calculating a product’s final price. It is likely they aren’t saving the money they think they are for the extra effort.
- Why complicate the matter? Any time a new distribution partner is added, even for small orders, there are several considerations that can potentially disrupt operations. For example, how well do new deliveries conform to current delivery schedules? Some vendors only deliver at certain times of the day, while others require special arrangements like night delivery. Adding a new account means adding one more business relationship for employees to manage, both financially and logistically. There’s a good chance your customers don’t fully understand the staff time and responsibility needed to coordinate a new delivery, which they’ll have to evaluate before determining whether the cost savings gained from vendors with lower prices are truly worth it.
Many sales reps may already be well aware of the hidden cost of price shopping, but trying to educate customers about it can look like you’re simply trying to defend higher prices. In our next column, we’ll look at ways to get ahead of price shopping issues and objections by demonstrating the value distributors bring into service relationships beyond product prices.