Point of Sale Agreements

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By John Garrett

Salesmen and saleswomen have an ever growing number of stereotypes and jokes made about them that may seem a bit too on the nose. We have all heard about the sales representatives who promise the moon and deliver mud. It is clear that the goal of a sales rep is to sell something and make a profit. Yet the offerings they put forward are rarely considered in a logical manner.

There is a psychology to selling. There are several books that address techniques of selling and most of it is built around relationship building and “selling the sizzle not the steak.” There is also some profound manipulation of prices and payment schemes that may involve quantum physics, time travel and new math. In short, the make up of most sales reps are technical lingo, bright smiles, concerned consultant, industry buzz words and mathematic magician. For the most part industry regulation has prevented the sale of snake oil, but they can throw some in if it will close the deal.

OK, so not all sales reps fit that caricature. However, it is important to remember the sole purpose of the sales rep in your presence. They exist to sell you things. Things that you need, things you might be able to use and things that are totally useless no matter how interesting that item may seem. They may have what you need at an outstanding price. It may be a good deal. But make sure you don’t lose sight of the fact that you have to be fully engaged and consider what purchases are being made and what purpose they serve.

There has been a big push in the area of medical imaging to have five-year point-of-sale maintenance agreements. These include discounts to the purchase price. The reality is that this “discount” is no more than moving part of the capital expense into the repair budget.

With very few exceptions, the first three to five years after the warranty of any imaging equipment is the best time in the life cycle of the equipment to use a time and material approach instead of carrying a contract. It will have the fewest breakdowns and least amount of downtime because it is still new. If you have an in-house imaging service team, this is the least expensive time to own the equipment – unless you get sold a point-of-sale agreement.

The manufacturer knows that the least expensive time for them to cover a full-coverage contract is in the first five years. So, they can discount the sale price if you commit to a long-term contract at the time of sale because they know that they will have a huge margin in the service contract. You will have to run your numbers, and consider your individual situation. However, I believe that a point-of-sale agreement is almost never a good way to spend your money. Buying the equipment with a smaller discount and serving in-house or via time and material is almost always a better decision.

 

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