Max Clark: [00:00] So if you’re walking in at a price anchor of 25 and you think you’re getting a good deal with a 20 % discount, I hate to break it to you, you’re probably nowhere near reality for what you should be buying that stuff from.
Max Clark: [00:13] The IT market is built for sellers, playbooks are for buyers. This is Signed, I’m Max Clark from ITBroker.com. Today’s topic, the three vendor quote. No fluff and off the cuff, here we go.
Max Clark: [00:32] This is incredibly scary advice that’s really common. How do you buy something? Well, you go out and you get three quotes. Need plumbing for your house? Go out and get three quotes. Need a TV? Go out and get three quotes. Need an AI platform or security infrastructure or data center? Go out and get three quotes. It is horribly misguided. Three quotes from who? How are you selecting? And what are you comparing?
Max Clark: [00:59] I mean, if you’re buying a Sharpie, then absolutely go out and price, you your online, you know, your local store in a couple of online things. I mean, if you’re, you’re buying, you know, a pallet of printer paper and, you know, you know, the brightness and the weight of a ream of paper that you’re looking for, absolutely go out and quote it price compare. You know, you’re, purchasing a commodity that is, you know, easily swappable, but
Max Clark: [01:30] The problem and why this advice is so dangerous is when you’re purchasing enterprise technology, it’s going to anchor a critical business function. And I’m sorry to tell you this, if you’re not aware of it.
Max Clark: [01:42] Platforms are different. Core functionality is the same. Let’s do something really basic, right? A phone system, a UCaaS platform, right? What’s core functionality? It needs to make and receive phone calls. Are all of them going to make and receive phone calls? Absolutely. From that point forward, things change. How their admin works changes. What their integrations work changes. What other platforms they support?
Max Clark: [02:11] change, what CRMs they integrate with change, how they integrate change, what devices they support change, what conference room hardware change, do they support call forwarding and three-way calling on a cell phone, that changes right, you know, so it’s not, you know, this general idea of go out and get me quotes from three different vendors and let’s figure it out, what are we doing here people, like what are you actually comparing
Max Clark: [02:41] How are you finding these vendors in the first place? And here’s the other side of it. What you are looking for and then trying to figure out and bet on is you’re trying to find the company that is going to give you the steepest discount or sell something to you for the lowest possible margin. Now, what you also don’t know is why are they willing to sell something to you for such a low margin?
Max Clark: [03:10] compared to somebody else. Now again, this is just assuming that you’re buying the same widget, right? You’re buying a, you know, with some sort of consumable, right? Like from distribution, like an optic for a router, right? Does that company have just a glut of them sitting, you know, on the shelves? Are they about to go under and they’re trying to get as much revenue as they can before they do? Do they have a, you know, a sales ramp commitment that they have to hit? If they don’t hit it, they’re gonna be in serious issues.
Max Clark: [03:37] What’s their underlying cost structure, right? If you’re talking about a company that is doing its own development and controls its own platform end to end, at some point, they don’t control their own platform the whole way, by the way. It’s just where do they not control? Compared to a service provider that maybe is an integrator that has gone out and purchased wholesale the platform that they’re reselling to you, completely different unit economics, right? But maybe
Max Clark: [04:05] What you really want is you want a strong integrator and you want a strong support function. And that’s what’s more important to your business because you’ve got 20,000 users in 10 different states and having somebody that can go on site and sit down with a person and do configuration and support is more important to you than, you know, eking another 5 % of margin out of it. you know, the other part of this that makes us really crazy, and I unfortunately see this all the time is,
Max Clark: [04:35] You know the industry collectively comes around and finds certain price points. They try to start stuff the price anchoring with So if you have something that um, the industry has decided is 25 a seat and it’s price anchored at 25 a seat when you do the initial interaction You know if you go out and you get three vendors And you start beating up the three different vendors. Are you going to find one vendor? That’s going to give you a 20 discount. Absolutely. You are you know It’s like table stakes. Of course, you’re going to find a 20 discount
Max Clark: [05:04] The difference is, is which one of those vendors has a totally weighted cost of goods sold per seat at $6 and which one is at $3 and can you buy from one of those vendors at $8, $9 a seat? So if you’re walking in at a price anchor of 25 and you think you’re getting a good deal with a 20 % discount, I hate to break it to you, you’re probably nowhere near reality for what you should be buying that stuff from.
Max Clark: [05:33] And you are not going to find this. are not going to expose this. And you are not going to get any insight to this process if you’re just going out and blindly quoting three vendors. I’m not going to get started in RFPs. I’ll leave that rant for another day. there are very few things that become pure commodities that you can compare apples to apples with. There’s functionality that’s going to overlap between the different ones. And that absolutely, 100%, you need to understand.
Max Clark: [06:03] But the key there becomes, you know, the common table stakes functionality is not what’s usually critical to you as a business and your functions and how you are going to go about driving your business forward. It is the things that make you unique as a business that’s massively important. And just going out and getting three quotes is not going to expose that. You’re not even going know what questions to ask. They’re not going to care because they know you’re just price shopping and you’re creating a situation where you’re just going to end up in a world of pain.
Max Clark: [06:34] So please, blind three vendor quotes. Let’s put this one, let’s kill this, let’s stop using it, let’s put this one to bed. It’s not serving anyone who’s out buying enterprise technology. That’s the playbook. More is available at itbroker.com slash podcast. And if you’re in the middle of a real decision and want someone in your corner, book an intro call at itbroker.com and buy tech without regret. I’m Max Clark, see you on the next one.
