View Full Version : What's the good and the bad with rebate?

11-14-2012, 09:43 PM
My supervisor asks today to explore the vendor rebate practice. She is not sure if this is common in IT vendors or value added vendors.

Manufacturer rebate was often seen in contract manufacturing sector. However, I am not sure about asking for rebate from HP, CDW or Staples for purchases of servers, laptops, digital storage, network switches, and cables. My assumption is that in these area, the price are very transparent and VAR is not the one that control and manage the product cost.

Vendor could become less aggressive in providing the best prices in the first place, expecting that we will ask for a cut into their profit. If we don't follow up getting the rebate, we could end up paying more.

Looks like vendor rebate may not be the best practice in IT procurement?

12-12-2012, 02:27 PM
We track new rebates as savings to the budget. Recurring rebates are excluded. We currently have a rebate agreement with CDW, however, we are in talks with them to reduce unit costs pricing and eliminate the rebate.

My position is that if they can provide a rebate then there is room in the supply chain to wring out more costs. Focus on a cost plus model vs rebates if possible.

01-02-2013, 09:41 PM
I agree with the previous post. Rebates are not an efficient way to achieve cost goals. Turn rebates into immediate savings at unit costs. Also, you must consider the time ($) it takes personnel to keep, gather, and track rebate info and the time to prepare and submit this info.