Banking

Waiting to buy hardware may not be the best cost-saving strategy

Some IT managers delay hardware purchases in an effort to save money through year-end deals. This strategy may work in some cases, but there are other ways to buy the hardware you need now at a discount.

Some IT managers believe that the best hardware deals are made at the end of a quarter or the end of the year because vendors are more likely to reduce prices to meet sales quotas. But experts we talked to warn that waiting to make a hardware purchase may not yield the best results. The best approach is to keep your eyes open and take advantage of opportunities when they happen.

What are you waiting for?
On the surface, waiting makes some sense. Often manufacturers, vendors, and resellers will lower prices in an effort to hit yearly or quarterly sales quotas.

“A lot of equipment companies are measured very highly on a quarterly basis and if they need to make a number of sales to achieve their quarterly goals, they’ll discount,” said Hal Van Horn, a CFO with Tatum CFO Partners, LLP, a firm that provides CFOs for companies at all development stages.

But if you find that you can wait, you should determine why you are able to wait. You should then ask yourself if you really need the equipment in the first place? That’s the advice of Martin Pichinson, the founder of Sherwood Partners, Inc., a firm that specializes in the restructuring and dissolution of technology companies.

Pichinson advises that managers should jump on deals as they happen.

“Waiting to buy right now is probably not a good strategy because deals come up as deals come up,” he said.

Shel Horowitz, founder of FrugalFun.com, a Web site dedicated to cost-saving resources and the author of several books about business cost-saving measures, said you should consider the "trade off" when you are deciding when to buy. "You have to value the savings on waiting to buy later against the savings of time and energy and productivity of buying sooner,” said Horowitz.

How to buy on the fly
There are several opportunities to find great hardware deals without the wait:
  • Comb through sources like newspapers for the bankruptcy notices of companies similar to yours. Keep an eye on the bankruptcy courts for companies that may be closing down or going out of business, said Van Horn.
  • Buy from remainder houses. “They don’t necessarily lend themselves to bulk purchasing, but many IT departments are really only supporting 10 or 20 people and they may find some very, very good deals,” said Horowitz.
  • Join a user group or a computer club. Some computer manufacturers offer these groups special deals, said Horowitz. “I know, for example, that Apple puts some of its best deals out to the clubs before it goes anywhere else with them,” he added. Most clubs are free to join. “And even if it’s not free, the cost is fairly nominal if you’re saving $600 on a piece of equipment, you can afford $60 in dues,” he said.
  • Look to universities for computer equipment. They routinely dump older machines that you may be able to revive using a Linux program. “They tend to not be downsizers dumping fresh, new equipment, but rather upgraders getting rid of stuff that’s maybe two or three years old, which for probably 85 percent of all uses, is totally fine,” said Horowitz.

These methods may not work for software purchases. “We did not have the same kinds of success in software that we had in hardware,” said Van Horn. One reason is that many software licenses are non-transferable, he said.

Pichinson said it’s wise to have some type of support for your software. “(With) software, you want someone to be accountable,” he said.

Finding support for hardware you do not purchase through a manufacturer or a vendor is easier, according to Van Horn. The larger manufacturers all have service departments and maintenance departments that will take service calls, he said.

Build relationships to land a good deal
If you’re not a manager in charge of a million-dollar procurement account, you can still use your power as a buyer to deal with a vendor. “A good IT manager should take advantage of the clout that they have as the purchaser of a large quantity and negotiate,” said Horowitz.

“If you’re buying 10, or 20, or 100 units, you ought to be able to negotiate a much better price, because you’re essentially doing the sales force’s work for them,” he said.

Van Horn warned that wrenching a vendor for a good deal when they’re desperate may backfire when times are good. “If a certain item that you need is a cyclical product, and you take advantage and beat the dickens out of a vendor when it’s bad times for the vendors, when it’s (a) good time for the vendors, i.e. everybody wants their product, they can just charge you list and walk away and not have to do anything for you,” said Van Horn. “There’s a relationship and a fine balance to maintain there over the long run,” he added.

Tell us how you save money
Do you have any cost-saving tips? What strategy does your shop follow to curb spending? Tell us by starting a discussion below or dropping us a line.