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Margin mugs: A bank paid how much for a 2m Ethernet cable? WTF!

El Reg brings you the hall of shame

A bank paid a rapacious reseller more than £40 for a two-metre Ethernet cable that cost just 32 pence at trade price or retailed for £4 on a popular online store, in the latest survey of UK margin mugging.

The unnamed company actually coughed £42.32 for the cable, which represented a 12,347 per cent markup on the supplier's cost, according to tech seller Probrand, which analysed £12m worth of tech spending over 24 months.

Other instances in the hall of shame include another bank that forked out £73.24 for a stylus pen that was bought at a trade price of £5.62; a construction business that splashed £83.01 on a printer ribbon that wholesaled in the channel for £6.42; and a media firm – not El Reg – that stumped up £27.83 for a £3.07 16GB USB.

Then there is the NHS organisation that bought a PC power cable for £8.41 versus the trade price of 82 pence, or the gaming biz that bought 100 female extension cables for £2.98 a pop when they were sold to trade for 67 pence each. These were among the most extreme cases.

Blame the lawyers...

However, it was procurement professionals in the legal sector that won the gong for, on average, being the worst tech buyers in Britain. Buyers in this area paid a mean margin of 23.61 per cent, higher than the 14.08 per cent industry average that was highlighted in the survey.

The Society of IT Managers (SOCITM) reckons that industry best practice means buyers shouldn't be paying more than 3 per cent margins to suppliers for hardware. Yes, we know Reg readers won't subscribe to this view of the tech world. You've told us this previously.

The list of worst offenders continued, with the consultancy industry coming in as the second crappiest procurers, paying average tech margins of 21.77 per cent. In third and fourth were the business services and nuclear sectors, followed by gaming, academics, and construction.

Housing associations and central government also featured in the top 10. Bottom of the list of the top 20 was emergency services, which coughed average margins of 9.4 per cent.

Your correspondent wrote about resellers for far too long, and one thing came back time and time again when talking to salespeople: "The margins are crashing, they are too low."

In this respect, perhaps the IT channel is a bit like the farming industry. Farmers are often moaning about falling subsidies and struggling to make ends meet while sat on the comfy, heated seat of their Range Rover.

Incidentally, the farming industry was not among the league of bad buyers. ®

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