When it comes to purchasing products or services in bulk, blanket purchase agreements (BPAs) are a popular and effective way to ensure that a company is able to access the products or services they need, at a reduced price. However, it`s important to keep these agreements up to date, by regularly reviewing and updating the price breaks offered.
So, what are price breaks and why are they important? Price breaks refer to the reduced cost that a company receives for purchasing a certain quantity of a product or service at once. For example, a BPA may offer a 10% discount when a company purchases 100 units of a product, and a 15% discount when they purchase 200 units.
Price breaks are crucial for companies looking to save money, as they incentivize bulk purchasing and encourage companies to stock up on the products or services they need. However, if price breaks are not regularly updated, companies may miss out on potential savings or end up purchasing products at a higher cost than necessary.
When updating BPA price breaks, there are several factors to consider. Firstly, it`s important to review the current prices offered by the supplier and compare them to market rates. If the supplier`s prices are significantly higher than the market rate, it may be worth renegotiating the BPA or finding a new supplier altogether.
Secondly, companies should consider their own usage patterns and purchasing volumes. If the company has increased their purchasing volume since the last BPA was negotiated, it may be worth requesting higher price breaks to reflect the increased demand.
Finally, it`s important to consider the length of the BPA itself. If the BPA has been in place for several years, it may be time to renegotiate the agreement entirely, rather than just updating the price breaks.
In conclusion, updating BPA price breaks is a crucial part of ensuring that companies are able to access the products or services they need at a reduced cost. By regularly reviewing and updating these agreements, companies can save money, streamline their purchasing processes, and maintain positive relationships with their suppliers.