Optimisation of Laptop Rental Expenses
Introduction
Zyxware Technologies has been utilizing rented pre-owned laptops to meet various project and operational needs. The laptops were rented from credible vendors and were verified for security vulnerabilities internally, loaded with relevant applications and operating systems and then assigned to employees. This approach was taken up when buying laptops for employees across India was not financially sound and managing the logistics of delivering laptop to the employee and collecting it and returning it in the event of servicing requirements or when employees exited was complex and time consuming. The rental laptops with delivery, repairs and collection at the time of exit of the employee managed by the vendor was a neat solution to these problems.
While this mode had been operational since 2020, there were deductions in prices from time to time. However, over the past two years, there had been no revision in the rental pricing from the vendor's side, resulting in rentals being high compared to the vintage of the laptops. To ensure cost efficiency and better resource utilization, the IT Infrastructure team initiated a review of the existing laptop rental pricing structure. Below is a description of the approach and the results achieved.
Objective
To reduce the recurring laptop rental expenses while maintaining the quality and reliability of services provided by the vendor.
Challenges
The primary challenge was the negotiation process with the existing vendor, which required detailed justification and multiple discussions to reach a mutually agreeable outcome without affecting service continuity.
Our Approach
The IT Team began with the premise that the price had to make sense to both parties - vendor and us for the service quality to be maintained at acceptable levels. Accordingly,it was decided to adopt a structured, data-driven approach to arrive at a rental price point.
Two methods were adopted to arrive at the price point. First was to take prevailing market prices and compare it with the prices we were currently paying. The second method was to draw from accounting and use the depreciated value of the laptops as the basis for discussion with the vendors.
Market Price Comparison:
- Collected and analyzed pricing details from multiple vendors to assess the current market rate for laptop rentals. Evaluated service terms, device quality, and support commitments of other vendors to establish a realistic negotiation baseline.
- This gave us a price that was 5 percent less than our current rental prices.
Depreciation-Based Negotiation:
- Calculated the depreciation value of laptops that had been in use for over three years. Add a service cost and profit margin on top of it to arrive at a price point. This was enabled by our knowledge of prices of laptops, typical service cost and profit margins from our days of selling and servicing laptops.
The prices arrived at from both the methods were compared. The price arrived via the second method was 20 percent less than the current price and the price arrived via the first method was 5 percent less than the current price.
We set the price derived via the second method as our target price and proceeded with the negotiation with the vendors.
Negotiation
We initially identified 3 new vendors and sought quotes from the three vendors. They offered us prices which were about 5 percent less than our current prices. However, they were not near the target price we had set based on the depreciation method. So we identified 3 new vendors again and communicated our expected price and asked them to submit a proposal that was closest to our expected price. This time we obtained prices that were closer to our expected price.
With these quotes, we approached our existing vendors for a renegotiation of the rental prices. They were amenable to offering us prices that were near our target price.
Result
- Successfully achieved a 15%-20% reduction in overall laptop rental costs.
- Maintained a positive relationship with the vendor through transparent communication and data-backed discussions.
- Established a review mechanism to periodically evaluate vendor pricing and contract terms in the future.
Conclusion
Through systematic analysis, vendor comparison, and strategic negotiation, Zyxware Technologies effectively optimized its laptop rental expenses. This initiative reflects the company's commitment to cost efficiency, operational sustainability, and responsible vendor management.
