Applegate’s Pricing
Applegate has 20+ years’ experience in helping suppliers reach new customer markets, broadening supplier reach and helping build a loyal client base. For buyers, we help you quickly and easily discover suppliers for goods and services that you don’t have an existing supplier for, and we help you explore new suppliers for the things you’re already buying regularly.
Best of all, most of Applegate's services for both buyers and suppliers are provided free of charge. This post though is about the one service we do charge for, that’s the fees we charge suppliers for membership of our Supplier Network.
Why do we charge only for Supplier Network membership?
At the most basic level, we believe that it makes sense for the supplier to pay for procurement costs. That's because in virtually all industries, sellers pay to reach buyers. You may employ sales staff, spend money on advertising, build websites or pay for branding, amongst countless activities. All to reach buyers, hoping to convert them to become regular customers.
Applegate makes it easy and cheap for buyers and suppliers to connect. Everyone wins; our suppliers win new business at a price that should compare favourably to other channels and our buyers find better suppliers for free. By saving you some money, Applegate can book some revenue too. Happy days.
It’s worth noting in passing that large companies with dedicated buying teams do pay very significant sums for complex procurement software, but we think that model is outdated and for smaller companies that level of expense and complication doesn’t deliver the savings making it worth bothering with. If you’re interested, our company-wide buying solution is completely free and designed from the ground up to be simple to use for non-procurement professionals.
What do we charge?
We use the information available to us to estimate the value of business won on our platform. We then aim for our fees to come to be proportionate with that.
Subscriptions can be as little as £5 a month going up to £150 a month and beyond, depending on sector. There is no platform fee or any transaction charges that other procurement and marketplace providers traditionally charge.
Prices in each sector can change month to month depending on activity, but once you’re in contract that price is fixed - you always know what you’re committed to paying.
How do we decide what to charge in your sector?
Our pricing calculation is driven by:
• The sector you work in
• Average profit margins in that sector
• The volume and value of requests we have in that sector
• The number of competitors you have
The science bit
Critical to understanding our pricing is the idea that we think about it on average. We use what maths and finance types like me call an ‘expected value’. For example, say you are 1 of 5 suppliers invited to quote on a £100k request. You work in a category that has profit margins of 10%. So you have a 1 in 5 chance of winning a contract that would give you profit of £10k:
1/5 * 10% * £100k = £2k
This £2k is the expected value. It’s an average, not what any one person will actually receive or generate in profit on this one request. Really it describes the average result across many quotes. So that £2k may be a nice idea, but it's not a huge use to you that you had a 1 in 5 chance of winning a great contract if actually in the end you didn't win it. But over the course of your membership, you will receive many such requests, and by the time you've had 5 requests where you had a 1 in 5 chance of winning, hopefully you have won one of them & the average then makes more sense.
Why is my sector priced as it is?
Using the expected value methodology, what happens is that where we have a high volume of high-value requests coming through with little competition, the price is higher.
Where we have categories with less volume that may be less profitable sectors, prices are lower.
We review and update our pricing monthly, and our prices do go down as well as up if the value of what we’re delivering in a category goes down. That said, the volume and quality of requests on the platform as a whole is growing strongly. Once you take out a subscription, that monthly price is fixed so you always know what you’re committed to paying.
How can I make myself more competitive?
To help you guide your pricing, for every request you quote on we’ll give feedback. We follow up with buyers to learn outcomes, and where we can get information we’ll share it with you. We’ll tell you how you compared to other quotes on price and speed of response (important to some of our buyers). Our free monthly Marketplace Intelligence reports also give you a picture of how you compare to others in your sectors and the volume of business transacted on Applegate in the month. That allows you to know where you are in comparison to your competitors.
Why Applegate is a market leader
The main driver of our profitability is retaining your business. Recruiting new clients who don’t renew their initial contracts costs us more in acquisition and customer support than 12 months of subscription gives us. The only clients that make money for us are happy ones who renew, so we do everything we can to make the sums add up for you so that you stick with us.
We believe we've found a sweet spot by bringing together a huge dataset compiled over 20+ years, our network of suppliers built up over 20+ years and now Artificial Intelligence. Exactly how all this comes together is a blogpost for another day, but it’s why we can get this to work for lower values of spend than traditional procurement services can address. It also means we can make it free to use for buyers, which means more business opportunities for suppliers like you.
Tips and Tricks for your subscription
Understanding how our platform works will help you get the most from your subscription. I personally spend a lot of time looking at how this theory works in practice, these are my top recommendations:
1. Make sure your categories are right. Applegate has a system of 2,000+ categories, so this isn't an easy job. The best thing to do is call, email or webchat us & have someone who knows the system inside out do it for you, free of charge of course. If we don't know accurately what you do, you won't be receiving the best possible selection of requests.
2. Tell us if you're getting irrelevant requests. We use the 'expected value' methodology above to check we're delivering value to our subscribers. So if you get a request that's no good for you but you don't tell us, we'll think that we've given you something useful when we haven't. In turn, that will affect whether you get invited to future requests that might have been better for you. Remember that not all suppliers are invited to quote on every request, that's how we ensure a reasonable chance of you winning each request. Lastly, if we still have you marked down in a category you don't work in, we'll continue sending you invitations that are of no use to you, the buyer or us.
3. If you can't fulfil the exact request, maybe you can suggest alternatives? Often a buyer will have something in mind, but you may know what they need better than they themselves do. Even if that's not the case, this is an opportunity to engage with someone who buys what you sell. Even if they don't buy from you this time, next time they'll recognise your name as the supplier who took the time out to respond last time. We all know what it’s like having a difficult supplier, we certainly have suppliers here at Applegate that I dread calling because I know they’ll put me on hold for half an hour. Show potential customers that you’re not going to be that guy.
4. Put prices in the relevant section on the platform. There are two main reasons for this; firstly, when a buyer uses the comparison view, this is what they'll be presented with. If it just reads zero, they won't take the time to explore why that is, they'll just choose someone else. The point of the service for the buyer is to reduce that manual effort for them. Secondly, the feedback you get from the system is based on this. If you enter £0, the information about where you compare to the other quotes will be meaningless