Harnessing Your Buying Power through Preferred Vendor Agreements
Josiah Way, PhD, CTS
We’re all familiar with the phrase, “the customer’s always right.” That’s a misnomer. As a business owner, I can tell you, the customer is definitely not always right. In fact, not every customer is right for every business, and not every business is right for every customer. That is why options exist. But there is one truth: “The customer controls the conversation, because the customer holds the checkbook.”
I have heard many integrators say they won’t do any work in the higher ed vertical because we low-bid our projects and never have the budget to do things right. Those are the exact same companies that lost bids to other integrators and who couldn’t properly scope a project to make sure it landed in the budget allotted. Higher ed work is about volume, not single jobs. It’s a long game, not a quick buck. It’s about being a strategic partner for us and our two-to-three-hundred rooms, not the one-off project we’re working on at the moment. 
This is why I continually say, “I don’t buy one of something, I buy two hundred.” Every solution must scale and work across the enterprise for the good of the institution, in all instances. This means we have buying power. We have a lot of buying power. To harness it, however, we need to learn to speak in terms of the entire organization—even our entire vertical—not the project of the day. So often I have overheard others say, “I would like a demo of x-y-z, and it if works, I’ll put be installing in the ten rooms we’re upgrading this summer.” Sorry, but no manufacturer or integrator is going to get exited enough to offer the most competitive pricing they have available for ten rooms.
So how can we harness our buying power, even when the proposed project scope may only be a handful of spaces? It requires a two-fold process: (1) change your institution’s thinking; and (2) be honest with your integrators and manufacturers.
Buying power starts with your procurement process. A short-minded project-based bid process will only encourage vendors to push for the highest profit possible through low, off-scope bids that lead to change order hell. Engage with your procurement department to pre-negotiate rates with your vendors for both hourly labor rates and points-over-cost through a competitive bid process. Limiting your preferred vendors to only two or three on multi-year agreements, while ensuring your vendors they will split all the business of the institution, allows you to take advantage of their premium statuses with their manufacturers and distributors. A vendor who doesn’t know when or where the next project will come from has no incentive to provide low margins. Likewise, pre-negotiated labor rates with “not to exceed clauses” allow for better project quotes without the risk of change orders. Once you have established strategic partnerships with your integrators and resellers, you can discuss your institution’s long-term plans, allowing them to go to bat for you. Now your ten-room scope can be discussed and promoted to manufacturers in context of a multi-year multi-hundred space enterprise upgrade.
Leveraging this system in a socially distanced world, where camera and microphone installations have taken center stage can save your institution hundreds of thousands of dollars. When COVID hit, our institutions all turned to us to save the day. Our administrations asked, how can we continue business operations in a virtual world, a virtual world we can’t even see an end to? This created a mad dash to upgrade our classrooms to hybrid and HyFlex learning spaces. Having preferred vendor agreements in place means skipping the line of backordered products because you now have an advocate, able to petition on your behalf with the manufacturers to ensure you get your couple hundred devices at deeply-discounted rates before all other customers who are looking to buy one-offs or even the ten-offs. This exact system allowed us to have the latest equipment procured and delivered within weeks of sending students home in March.
The effect is an administration that now places confidence in you as a business leader and trusted partner with the institution’s finances, not just “the AV person.” Universities are not against spending money for the right student experience, but they are against wasting money. A history of overbudget projects doesn’t build confidence, but a history of well-negotiated deliverables that stay on-budget builds faith. The end result over time is that your budget grows, which means that you can properly upgrade and maintain your AV spaces proactively through a long-term strategic plan, developed between you, your institution, integrators, and manufacturers.
About the Column
The higher ed AV vertical is over a five-billion-dollar sector of the commercial AV integrations industry. Add in the live events, and higher ed accounts for over ten-billion-dollars annually. That’s significant, and why tech managers in our vertical must treat our departments like big business. Every month, Joe Way, PhD, CTS, explores important aspects of business operations, sales, negotiation, finance, and strategy based on over 25 years’ experience in business development, founding and managing several multimillion-dollar companies in the entertainment industry.
Meet The Author: Joe Way, PhD, CTS
Joe Way, PhD, CTS, is the Director of Learning Environments at the University of Southern California, in Los Angeles, CA and AV Nation 2019 AV Professional of the Year. He is the host of the Higher Ed AV podcast and co-founder of the Higher Education Technology Managers Alliance (HETMA.org), aimed at connecting the higher ed tech manager community and advocating for their common audiovisual needs. He is the author of the bestselling book, Producing Worship: A Theology of Church Technical Arts, is a regular contributor to leading AV-industry media outlets and podcasts, and serves on the AVIXA Tech Managers and Diversity Councils. Joe is an Orange County, CA, native with over 25 years’ experience in education, technical production and the arts, and organizational leadership and management. Over his career, Dr. Way has received diverse awards in the areas of education, the arts, and business, and is a regular keynote speaker and writer for AV-industry and higher ed conferences and media outlets.