|Purchasing Costs and Their Impact. Do They Matter?
As you go about collecting quotes from various vendors there are several things that may be involved in the cost of the items you are buying. Let’s start by citing the one cost that does NOT apply to IMSA. That is ‘sales tax’. As an agency of the State of Illinois we are exempt from paying any sales tax on our purchases. IMSA has a tax exemption certificate with a specific number for our agency listing our exemption from sales tax. The current exemption is valid until Year 2024. Other costs impacting your purchase to consider are:
· Screen Charge – Often associated with screen printing for promotional items like tee shirts. Cost is typically charged based upon each color that is used in the screen process. The more colors the higher the cost.
· Embroidery Charge: When using thread to embroider our logo the charge is based upon the stitch count – how many stitches it takes to create the image. The stitch count depends upon the artwork you embroider. In the case of the IMSA logo once we pay for it we own it. For that reason we should avoid paying embroidery charges multiple times.
· Fuel Surcharge: Different than shipping fees, this surcharge originated several years ago when fuel prices were at an all-time high. Vendors attempted to be creative to recoup some of their added costs and have continued the practice despite lower fuel prices.
· Restocking Fee: This fee is impose by some vendors for goods being returned to help defray the costs incurred to receive and process the items back into inventory. The fee is usually some percentage of the original sales price. The fee is imposed to help defray costs incurred by the vendor to receive and process the returned items back into inventory. Consideration should be given as to whether it makes sense to return the goods or not. In some instances the restocking fee is more than what the goods are valued at.
· Minimum Order Fee: The fee is imposed by vendors if the order total falls below a pre-determined minimum dollar amount taking into account all aspects by the vendor to process your order. The solution is to increase your order size for items needed or hold placing the order until such time you meet their minimum dollar amount.
· Shipping Charges: These charges can vary greatly and often can be more than the dollar value of the item you are purchasing. These charges are commonly inflated by the vendor and should be compare to the value of the order. Many factors such as distance, package size, weight, handling and type of service make it difficult to determine what a ‘typical’ shipping charge percentage should be in relation to order size. Again, if you are spending more in shipping than the value of the goods purchased consideration of deferring the purchase or identifying alternate vendors should be given.