New research shows:
- Product prices can fluctuate by up to 66% overnight
- 81%* of IT directors aren't aware of the scale of price fluctuations
IT and procurement directors could save 66% of their budgets by simply buying IT equipment on the right day, according to latest research.
IT benchmarking specialists at Mercato Solutions reviewed the daily supply chain price of 150,000 products during Q1 2013 using the KnowledgeBus IT spend analysis application – finding that prices can vary by up to 66.67% overnight.
Monitoring these huge fluctuations in trade prices enables buyers to ensure suppliers are passing on price reductions in line with 3% best practice margins, so eliminating over charging and maximising budgets.
However, a staggering 81% of IT buyers are unaware of the large volumes or values of fluctuations and the factors impacting on changes.
In total there were nearly one million individual price changes throughout the quarter with 60% showing price increases and 40% price drops. The price of a single model of VOIP phone changed 50 times in three months. The highest variance saw one product price go up by 66.67% and the greatest price drop was by 28.6%.
The largest fiscal increase saw a HP Ethernet security appliance go up by £49,000 or 38%, while a Quantum storage product went down in price by 5% with a drop of over £20,000.
Product life cycle and supply chain dynamics play a critical role in driving volatility in the IT market. End-of-life and new technology introductions drive vendors to drop prices to clear stock.
Seasonal discounts and promotions were also observed to impact price. Of changes across 79,991 products, 16% saw a zero net impact on price overall. An entry level storage solution experienced a drop at the start of month one and an increase of £3,000 at the end of month two.
Mercato Solutions' head of benchmarking, Al Nagar, explains: "Most accept that prices change but what is surprising is the scale and frequency of variation. Yet 81% of the IT buyers we spoke to said they weren't aware of the huge volume or value of price changes up and down' or the dynamics at play.
"All agreed that finding validated daily trade prices to compare against is a big issue.
"IT suppliers capitalise on the fact that most organisations can't keep track of supply chain stock levels, new product launches or seasonal trends that contribute to changing prices.
"Benchmarking applications like the IT edition of KnowledgeBus help buyers beat the system by tracking thousands of products every day as well as monitoring historical trends and alerting IT buyers of exactly the right time to buy."
The IT Edition of KnowledgeBus has helped over 1,000 users save time and money negotiating better deals on IT by automating the process of benchmarking against trade guide price and stock levels of over 150,000 products from 2,500 manufacturers. It gives users the market knowledge they need to negotiate better deals faster with suppliers, so helping them get more from their IT procurement.