CASE STUDY: Pricing of Lab Supplies

HappiLabs performed a small case study to evaluate the pricing of common lab supplies. It has become clear to us that some suppliers use the term “discount” as a tactic to convince scientists to buy their product. When in fact the “discount” provides no savings compared to competitor pricing.

This blog post will have little discussion; we’ll let the data do the talking. We compared pricing from small “Mom & Pop Shop” suppliers; large, publicly traded, well known suppliers; and Amazon.

Amazon is included because our purchasing history shows significant growth with them as more suppliers are selling their products in the Amazon marketplace.

METHODS

  1. We selected 9 lab supplies that HappiLabs commonly purchases for its labs.
  2. We found identical or similar equivalents of those items from at least 5 suppliers.
  3. For each item, we compared pricing from Fisher, VWR, Amazon and 2-3 smaller suppliers.
  4. We documented the supplier catalog # and/or manufacturer #, website link, item description, price, and unit size.
  5. Documentation was done in a spreadsheet, and screenshots of the product pages were taken.
  6. We compared List Prices and reported our findings. (data is as of April 1, 2016)

List Price is the cost of an item as listed on a supplier website. This does not include the price you pay after negotiating a discount, and does not include shipping or taxes.

RESULTS

Figure 1 shows the price ranges for three of the nine items. (Graphs for all nine items can be found at the very bottom of this post)

3 Price Comparisons
Figure 1

Large scientific suppliers have the highest list price. Fisher has one of the highest two list prices for 7 out of 9 products. VWR is in the top 2 highest list prices for 5 of 9 products.

Figure 2 shows the cumulative cost at List Price if a scientist purchased all 9 items individually from Fisher, VWR, and Amazon.

Fisher V VWR V Amazon
Figure 2

The total difference between Fisher and Amazon is 54%. Significant. For lab tape, it’s 77%!

Your lab might get discounts from Fisher and VWR, but do they average 54%? Isn’t it easier to go to Amazon or a small supplier like E&K Scientific or P212121?

Amazon aside, many of the small suppliers will always match pricing from large suppliers, and they usually have more exceptional customer service. This is where HappiLabs excels–finding and managing relationships with small suppliers to make sure your lab is treated well.

LESSONS TO BE LEARNED

  1. Don’t believe a “discount” is a fair price. Always double check pricing against a competitor, Amazon, or by asking HappiLabs.
  2. Comparison shopping will save your lab money.
  3. Build relationships with small, regional suppliers.

RELATED LINKS

ThermoFisher reported Net Profit of $400,000,000 in Q1 2016.

The Relabeling Racket: How what we don’t know is hurting biomedical research.

The Cost of Moving a Lab Out of a Biotech Incubator

FULL DATA

List Price comparisons and catalog numbers via HappiLabs

Price Comparison (10)

For questions or more details about operating an efficient lab, CONTACT HAPPILABS.

We’re hiring a Virtual Lab Manager

Virtual Lab Manager at a growing life science company

If you have experience with lab management, purchasing, or customer service apply!

ABOUT HAPPILABS

HappiLabs is a small business in Chicago, still in the early stage but past the startup stage, that provides a service to scientists called the Virtual Lab Manager. We are similar to an outsourced purchasing department (some might say a Personal Shopper) for biotech companies and scientific research labs.

Our focus is on customer service, and we’re for-profit but have a non-profit mentality.

Our mission: to improve the happiness of scientists and the quality of their research.

By helping scientists do their job, we are helping all the people on the planet who benefit from inventions, creations, and knowledge that scientists create.

Purchasing and Customer Service ScientistYou will co-manage a minimum of two labs. We are “virtual” so your job consists of sitting in an office and communicating with scientists, in other parts of the world, about what they need to run their experiments.

You will be trained to be one of the best lab managers in the world.

EXPERIENCE

A strong candidate will have one or two of these backgrounds:

  • Lab manager or postdoc who has managed scientists, experiments, and budgets
  • Purchaser in a non-science setting
  • Sales rep in the life science industry

RESPONSIBILITIES

  • Maintaining a daily ToDo List
  • Utilizing apps and software for managing labs
  • Communicating with scientists to understand their needs and experiments
  • Communicating with suppliers (sales reps, technical help, & customer service) to obtain pricing and technical info, place orders, retrieve order updates, and solve logistics and supply chain problems
  • Scanning the internet for new apps, technologies, or products that make science faster
  • Keeping detailed accounting records, such Purchase Orders and Invoices
  • Reporting progress and solving problems at team meetings

TIMEFRAME

Looking to start early next year, preferably in Chicago.

COMPENSATION

  • Full-time-ish, 30-40 hours per week,
  • $50-60k, depending on experience
  • No health benefits, yet.

SKILLS AND TRAITS YOU SHOULD HAVE

We want a long-term commitment, someone who will help a small company grow into a large one.

  • Tech savvy (very good with a computer, its keyboard and multiple monitors)
  • A Mac user, comfortable with Google products and spreadsheets
  • Be proactive – help without being asked to help, and ability to predict problems
  • Quick, mental flexibility – we’re a growing company, always changing, and a good candidate must be willing (and excited!) to change pace.
  • A passion for science and desire to make a difference in the world.
  • Tough – customers and suppliers can be difficult to deal with. You need to take the hits, be calm with your interactions, and move on.
  • Confident presence on the phone. We make a lot of phone calls to suppliers.

===== APPLY NOW! ======

CLICK this link –> HAPPILABS JOB APPLICATION (VIA A GOOGLE FORM)

It will not hurt to connect with Tom on LinkedIn.

The Financial Origins of HappiLabs

A message from our CEO, Tom Ruginis….

HappiLabs works with a lot of biotechs in Silicon Valley where funding usually goes in a standard pattern: Seed funding (a few $100k) to Series A (in the $5-20 million range) and onto Series B. It’s been an exciting few years to watch founders with innovative ideas raise money and turn the ideas into a product.

If you’ve watched the show Silicon Valley, you have some kind of minimal understanding.

But don’t think that’s the best or only way to start a business. As in the case of HappiLabs, there are other routes.

Boot strapping a startup

In 2013, my neurons were building the connections that ultimately would figure out a solution to this problem. I had no money and an “uninvestable idea.”

As a PhD dropout from a normal middle class family, I had to find creative ways to boot strap. If you are unfamiliar with the term:

Bootstrap is a situation in which an entrepreneur starts a company with little capital. An individual is said to be boot strapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.

The costs were minimal–parking, cups of coffee for some scientists, and a printer.

In the beginning, I used my connections from grad school and elsewhere to collect data about the price of lab supplies. This data turned into a “report” comparing the prices of nitrile gloves. I knew of a lab paying $120/case and I knew a few labs paying $70/case for the same gloves. Therefore, I provided the report to that $120/case lab. They were buying about 12 cases per year, saving them $600.

I asked the PI for $10 for a “subscription” to the report and he gave it to me.

HappiLabs was in business!

Once I figured out I was on to something, it was clear that I needed to hire help. The data collection was difficult and it wouldn’t be long before I exhausted my network. So I took my $10, went to the casino and parlayed that into $10,000…..j/k.

I networked, studied entrepreneurship, and put together a short presentation for friends and family. I told them I have this idea, it’ll change the world, and I need $20,000 to get started. 2 uncles, 1 aunt, and 1 friend later, I cashed four $5,000 checks.

Let’s mention one of my favorite pieces of advice from the entrepreneur community in Chicago:

Tell your family that they should expect to lose their money.

It’s a looooooooong shot to get your money back, but by being honest and transparent, it actually made the process easier. We’ve raised $43,000 total since the beginning.

Virtual Lab Manager made via microjobs

HappiLabs hired part-timers first, which we called microjobbers. They included a grad student (whose PI had abandon her), a former research professor (who had lost funding), and 3 undergrads. We worked in coffee shops or my living room compiling pricing and quality data about lab supplies.

We were surprised by the inconsistency of semantics about quality and the documentation that manufacturers provide.

The HappiLabs reports grew from 1-pagers to 8-pages of useful info, including fun tips from seasoned PCR’ers to the less experienced scientists:

HappiLabs first report

Now we started charging $500 for an annual subscription. The inspirations for the reports came from Consumer Reports and Angie’s List. If you ‘d like a copy of one of our original reports, CONTACT US.

Two labs at University of IL-Chicago and one at Northwestern signed up. $1,500 in income in 2013. Yay! But it was tough. Data collection was tedious and time consuming, and it was hard to sell as a magazine subscription.

One of the PI’s gave me great advice:

Tom, the data you have here is very helpful, but it’s still a pain in the ass to place an order. I have to ask one of my students or postdocs to do it. Sales reps are always calling, and it’s distracting. Can you handle this job?

Lightbulb! The Virtual Lab Manager.

I hired an extra person to start applying for an NIH grant that seemed perfect for us, but soon we realized we had no chance of winning. The $20,000 became $10,000, then $5,000, then $1,000.

And lucky for us,

we found Ethan Perlstein tweeting about his new company and needing help with setting up the lab.

I jumped on a plane to Silicon Valley, met Ethan, provided a detailed description of the service, and he was in. The Virtual Lab Manager was born. He gave me a $3200 check (2014 income doubled 2013!), I went home and we began calling Fisher, Sigma, E&K Scientific, Amazon, etc. And now look at Perlstein Lab.

The rest is history.

I think about fundraising in Silicon Valley but like the idea that I’m in full control of HappiLabs. I fear investors might distract us from our mission, which is the most important part:

To improve the happiness of scientists and the quality of their research

HappiTom.

 

 

Purchasing Standards for Suppliers

Supplier standards for HappiLabs virtual lab managers

This post is for suppliers.

We want to help you help HappiLabs help scientists.

HappiLabs is developing an evolving set of standards to help our Virtual Lab Managers decide which suppliers to buy from so that scientists get what they want, at a fair price, quickly. Keeping their experiments on schedule, within budget is good for science and global human health.

We manage purchasing for >150 scientists, spending more than $400,000 per month from >200 suppliers. Sometimes we have no choice who to buy from because the scientist has a very specific request. But in many situations, we are given the flexibility to choose the supplier.

Some suppliers stink at what we call the Purchasing Experience, and some are excellent. The gold standards on our internal ranking system are NEB and AbCam. They are reliable, quick, and give us the information we need when we want it.

Here are 3 actions you can implement as a supplier to make us happy with your purchasing experience, and therefore, more likely to keep buying from you.

1) Get us a quote faster than 24 hours.

When we ask for a discount on an item we don’t already have a quote for or we are buying in bulk, we don’t want to have to wait 2-5 days. It’s silly that we depend on sales reps in the field who can’t respond to our requests until they get to a computer. Don’t undervalue the inside sales rep.

Fist bump to Matt G. from LifeTech (Thermo), Sean from P212121, Chris S. from VWR, and Marwan at Bio-Rad.

2) Send automated shipping updates.

To keep scientists on track and on-time we notify them of when their order will arrive. Obtaining a UPS, Fedex, etc tracking # is how we do this.

We do not want to spend 5-10 minutes logging into your website or calling customer service to find the tracking #. NEB and Amazon are exceptional. Once an item ships, they send an email with tracking number. Fisher, you should know your “Shipping Notifications” are useless. Our Virtual Lab Managers have learned to ignore it. The “Here” link is a dead end. Can you fix this?

Useless-Fisher-Shipping-notification-happilabs

This is a winner:

Tracking number for scientific orders

3) Send automated invoice (PDF format is preferred)

Most companies do, but some don’t, which require us to make phone calls to customer service or log into websites. Save us 5-10 minutes and automatically send this via email, and a PDF is preferred. Life Technologies (Thermo), Qiagen, and Amazon we’re looking at you.

Keeping scientists happy is our #1 goal, but keeping the accounting department happy is important too.

Bonus points if….

1) You have online chat.

Online-chatVWR, P212121, IDT, Fedex….great job!

2) You provide us a dedicated customer service agent. 

Our Virtual Lab Managers move fast, like Jimmy Johns. We do not like losing 5-10 minutes on the phone with customer service. Therefore, we’ve started allowing a dedicated customer service agent access to our team via a private Slack channel. Thank you to Sigma, E&K Scientific and the few others who have provided us a dedicated person. It is very helpful and allows us to post a question and come back to it later.

3) It takes less than 2 days to update a shipping or billing address.

We’re constantly baffled by how long this takes for most suppliers. The process requires filling out paperwork and then waiting for some kind of approval. We understand, due to the nature of some supplies that are regulated, that it takes time, but better communication about timing will be appreciated. 🙂

GE Healthcare, it’s taking a week. What does this mean, from a customer service agent:

“I’ve started a work flow to have the address updated in our system.”

Suppliers, we want to build a relationship with you. If you have questions, reach out: https://www.happilabs.org/contact/