Technology services provider Probrand has released a study that reveals the scale of the margins some buyers are paying out to IT resellers, with retail spending an estimated £98,329.36 more than necessary due to inflated margins.
Analysis conducted on more than £12 million worth of tech spending across 20 sectors over a two-year period highlighted the staggering mark-ups organisations are paying to suppliers.
Industry best practice, as specified by the Society of IT Managers, states that organisations should pay no more than a 3% margin to suppliers. However, Probrand’s study revealed that the average margin paid by retail was 12.99% - over four times the recommended mark-up. One buyer paid a staggering 501% mark-up on a single product.
Ian Nethercot, MCIPS supply chain director at Probrand, said: “500% profit has never been deemed fair and equitable for any product purchase, and IT buyers are fundamentally not getting the deals they expect or deserve. The volatility and complexity of the market, with a dose of human intervention in between, is seeing IT budgets unknowingly wasted. “Buyers are also consuming vast swathes of time doing their level best to manually get quotes, compare and negotiate discounts. “We believe it is time for a change, buyers demand fair deals from an open and transparent market and that is exactly what the industry needs to deliver. Ultimately, it will help IT procurers save time and unlock more IT for their money.”
The report revealed that geopolitical factors, such as Brexit, are impacting prices in the IT market, and vendors were using the uncertainties around Britain’s departure from the EU to increase prices at the beginning of 2019.
The report also offers guidance on how those purchasing IT equipment and services can avoid paying over the odds and lists a number of steps that can be taken to prevent this.