Acer resellers have expressed concern over what they perceive to be inconsistent and biased pricing policies within the vendor’s dealer community.
In particular, they have found it tough to compete on price with certain Acer dealers for whom the vendor reserves the right to offer special pricing when pitching for education contracts.
In one case, an Acer authorised education reseller has been distributing price lists to schools offering machines normally sold through distribution at more than $1100 for just $820. Resellers who also wish to sell to such schools, but do not have the same relationship with Acer, cannot conceivably compete on price.
Acer channel manager, Greg Mikaelian, defended the pricing practices on the basis that the “special treatment” was necessary to ensure the vendor won education and Government sales.
Mikaelian said there were, at any one time, a small number of select Acer dealers for whom special pricing was on offer.
“This [pricing] is contract-specific, a case-by-case basis,” he said. “And it is only available to specialised education resellers who have the sales infrastructure and the numbers in that market segment. It is not open through distribution.”
In such a scenario, resellers that have a direct relationship with Acer submit competitive information back to the vendor when bidding for an education tender and request Special Project Pricing (SPP). Acer obliges with the relevant pricing if it sees the dealer as the strongest prospect among its partners to win the contract.
These select resellers, Mikaelian said, provide competitive information back to Acer when involved in tenders.
“If during a large tender there is a competitor that is being very aggressive on price, we need to back up our resellers,” he said. “At the end of the day we are a channel-leveraged organisation and we need these resellers to help us compete.”
While Acer could not always realistically compete on price with the cut-throat offers from Dell and whitebox dealers, the vendor would offer substantial discounts and other sales support to the reseller to help swing the deal, Mikaelian said.
Drastic reductions in price did not impress the rest of Acer’s channel, regardless of whether they clinched deals for Acer.
One reseller, who wrote to ARN about the matter, said such strategies had historically caused havoc in the dealer channel.
“Every few years somebody pops up and starts selling PCs at ridiculously low margins with the philosophy that volume selling will cover costs,” he said. “From my recollections, most — if not all — that previously attempted to do this failed, the company went into receivership and suppliers were left out of pocket.”
Acer distributors feel the same about the partiality of Acer’s pricing strategies, but admit that other PC vendors use the same tactics.
“Acer is certainly not alone on this,” a spokesperson for one distributor said. “For most vendors, corporate and education pricing isn’t available through distribution.”
While he did not believe Acer was doing anything wrong, the spokesperson insisted it was losing sales when resellers outside the select few pitched for education deals.
Often such resellers found competing on price so difficult that they switched to recommending the products of competitors, he said.
The spokesperson said the vendor was missing opportunities when it did not offer education pricing through its distribution channel as many resellers that could quite feasibly gain direct status with the vendor — including many who hold strong relationships in the education market — chose instead to use the value-added services of a distributor.
“Commonsense tells you that with school pricing so low, having another mouth to feed in the channel is not ideal,” he said. “But if resellers can work with those margins to get the sale, then they should be able to.”
There may be light at the end of the tunnel for such resellers yet. One distributor said Acer was showing some signs that it might be flexible with its special pricing. In areas where authorised education resellers were not bidding, there have been a few other fortunate resellers that have applied for SPP pricing and had it approved.
“I believe it is [Acer’s] intention to review the system,” the spokesperson said.
He also defended any accusation that Acer’s special pricing might price its own channel out of profitability.
“Acer is number one in education and it is prepared to go in with low margins,” he said. “But there is a limit to how low it will go.”
The spokesperson cited one tender where IBM pitched so low that Acer knew its channel could not sustain the pricing, and withdrew. “Eventually, the customer came back to Acer anyway — probably for the service,” he said.