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What cost-saving tactic is actually losing your company money?

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In this day and age, all businesses run on technology – computers for employees (sometimes multiple for each), servers, printers, etc. – and regularly updating or adding hardware can become a significant company expenditure. Business owners often look to critical hardware purchases in their efforts to cut costs, which leads to a common mistake: assuming that doing their own research and buying devices with the cheapest sticker price is a viable way to save money.

But when you or your employees go shopping for computer hardware, software and peripherals, there are a variety of ways to bleed cash. Here are some of the most common pitfalls our clients have run into.

‘Money-saving’ tactic: Buy the cheapest model available

Finding a new laptop without the help of an MSP typically involves surfing different websites to find the cheapest model in a desired brand’s list of offerings. Alternatively, you can just put in a couple of specifications and choose the cheapest option in that bracket, regardless of brand. This approach may seem sound, but there’s a reason an MSP will choose one brand over another, even if that brand is more expensive. Cheaper prices can sometimes mean inferior construction and durability, meaning you’ll need to replace parts or even the whole model sooner and more frequently. This is likely to result in a higher cost over time compared to paying more for a higher-priced model upfront.

Example: Your MSP quotes a new laptop at $1,500, but you can find one with most of the same features for $900. However, the cheaper model comes with a shorter and less comprehensive warranty. Moreover, its parts have a shorter life span, meaning you’ll likely have to pay for multiple replacements out of pocket, and the entire unit will need to be replaced after three years instead of five. Although opting for the $900 option means you’ll save on the sticker price, you’ll be out more money than you saved in the long run.

‘Money-saving’ tactic: Buy parts and assemble

Once, a client looking for a new laptop decided our quote for the make and model that best fit their needs was too high. The reason? They had seen all the parts at a PC store for prices that would add up to be cheaper than the quote. However, they didn’t factor in the resource time that someone on their staff would need to build that computer, or the expenditure associated with hiring someone from outside the company to do it. Also, the laptop would not carry any warranty, potentially costing hundreds in parts each time something broke. And while most quality machines last around five years, something homemade is an unknown, meaning it may break and require total replacement in a year or two! All of these elements would have ended up costing the client more than the $100 or $200 saved on the sticker price.

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‘Money-saving’ tactic: Skip the warranty

MSPs always recommend warranties for high-price hardware pieces like laptops, desktops or servers. However, people will opt out to save money upfront, assuming the chances of needing the warranty are slim. But between human error and normal wear and tear, it’s actually more than likely something will happen to a piece of hardware – and if you don’t have a warranty, you’ll face out-of-pocket costs. Keep in mind that even if you have an MSP like MyITpros, we are unable to do hardware repair, so although we can liaise with the vendor on your behalf, those repair or replacement costs are coming from you. When it comes to warranty, it’s always better to be safe than sorry!

The hidden cost

When considering the scenarios outlined above, most people don’t factor in employee resource time. If you or your employees spend time trying to find a better price on a laptop, how many dollars must be saved on the sticker price to offset the costs associated with that time? And what if you purchase something incompatible with other parts of your network? Now you’re out the time it took to buy the first piece, plus the time associated with returning it and researching a replacement – not to mention any downtime caused to the business.

MyITpros offers procurement services to all our managed services clients. If you’re looking to work with an MSP, talk to them about their procurement service and what that entails. If you already have an MSP, know that they understand all the factors that go into making hardware and software decisions, and trust that they are looking to get the best value for your company.

The purpose of this blog is to answer the questions you ask!  For more information around our procurement services, feel free to contact us! You can also head on over to our services page to learn more about our managed services offerings. 

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