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Pricing Inconsistencies for Procurement

A study conducted last fall by the TaxPayer’s Alliance found many pricing inconsistencies within the British government. What does the British government have to do with your US small business? It can bring to light some areas that may be neglected or could be improved upon. Let’s take a look and see what we can learn about pricing inconsistencies that may be plaguing your business.

First, let’s examine a couple parts of the study. You’d think that the government buying something as simple as basic A4 paper for its various offices would find some fairly consistent arrangement, but that was not the case. The Department for Business, Innovation and Skills paid the most at £12.43 per box of 2,500 sheets. The Department of Health, the best performing department, bought boxes of paper for £8.93 each, saving £3.50 per box over the BIS.  The remaining departments fell somewhere in the middle with the majority paying well over £2 more per box of A4 paper than the Department of Health.

Energy procurement reflected a similar story among government departments. The Department for Business, Innovation and Skills also paid the most for its energy costs with its average hitting around £110 per megawatt hour.  The best performing department, the Ministry of Defense, paid a mere £34 per megawatt hour of energy. Some other things of note: The Department for Transport, the Department for Education and the Home Office all paid over £50 per megawatt hour more for their energy than the Ministry of Defense.

 If you have a large company you may find similar inconsistencies within the various departments. If you are a small business you may find pricing inconsistencies between orders or you may also have smaller one or two-person departments who tend to favor one supplier while others order from yet a different supplier with overlapping products of different prices. Look for inconsistencies and explore how you can even out the inconsistencies to your financial advantage. 

May 31, 2013
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BY Bellwether
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