Control.com - Nerds in Control

We have always been 100% A/B until recently. Under pricing pressure from our best customer, we have switched a few components to another source. Now A/B has doubled our price to teach us a lesson. We can get our old pricing back if we promise to standardize on them. Has this happened to anyone else?

I've had special negotiated pricing from a number of distributors for all or part of a certain manufacturer's line, but it never came with a clause prohibiting me from using components from someone else, though it is in your best interests to concentrate your ordering to those with whom you have such agreements. I would be cautions about letting them "teach you a lesson" as they may decide you need more lessons in the future.
--
Steve Myres, PE
Automation Solutions
(480) 813-1145

To add to the general "teaching of lessons" theme: Rockwell Automation is now taking integration, consulting, engineering work away from us. Maybe the lesson that we need to learn is to deal with suppliers/manufacturers that have a clear understanding of their place in the market, and respect our place. Maybe our opinions need to be more clearly brought to those who need
to hear them. Maybe we need to assert our influence.

Of course the have the muscle to do what they want, of course they can set prices as they like. But only as long as we buy!

Throughout my career I have never been "taught a lesson", I have learnt lessons when I was good and ready. For anyone, manufacturer or distributor, to exhibit the attitude of teaching lessons to their customer base is indicative of serious problems in their brain supply chain. Start working on getting on with someone more supportive. Anyone interested in an un-opened
Rockwell Automation Toolkit?

Hugo

The problem there is the same as with Windows. People are so used to being manipulated and exploited that they not only accept it, they come to identify with the exploiters. It's the Stockholm Syndrome all over. This attitude
allows the companies to do pretty much whatever they want. It's not muscle, simply brainwashing or successful propaganda to the effect that they must stick with their captors for safety.

Regards
cww

Do you buy direct from Rockwell Automation (If so you must be a very large user) or do you buy from a distributor? If you buy via a distributor you should contact your local Rockwell Automation area manager and make them aware of this price doubling. I assure you they will not agree with this policy and help you get the pricing you deserve. Good luck.

Best regards,

Michael E. Crossman
PLCs Plus International, Inc.
http://www.bkppi.com

AB can give out some really good prices when they want to. I would not be at all surprised to see a substantial increase in price to a customer that stopped buying as much. AB just does not seem to want to deal with the smaller users as much, and seems to focus on the bigger users. It's where the money is, so why not?

I don't think it is crooked, unethical, or even a bad business practice. A company has a right to set its own pricing policies. And if you no longer purchase enough stuff that you are so favored, that is really your problem.

If you re-read the original post, this is not a volume pricing issue, the discount seemed to be dependent on the exclusion of competitors equipment. Besides being anti-competitive behaviour, this should ring alarm bells. Doesn't the manufacturer think that their products can compete on quality?

marc sinclair

It works out the same way. If you are using competitive products, presumably you are using less AB products. But, I have never heard that AB has such a practice. They do encourage sole sourcing by making the price attractive if you agree to it.

It's not the same thing at all, Bob. In the original post, he said his preferred pricing was withdrawn after doing a single project with components from another source. Certainaly an agreement based upon purchase of a certain projected volume is a far different animal than one based upon the exclusion of other sources. Not saying it's illegal or immoral or anything, just probably not in the best interests of the customer to buy into.

If I recall correctly, that is not what he said. I believe he said he had changed out some components and used cheaper ones. i got the impression he had switched to a different brand for thos components for all his projects.

maybe my recaller is bad.

In North America, Allen-Bradley sells exclusively through independent distributors. THEY set pricing for the end users. A-B can suggest pricing but the distributor has the ultimate say. How one distributor handles a given customer is no reflection on the rest of A-B distribution in the U.S., and is certainly not a refelction of the manufacturer, A-B. A-B currently has the best value for a control platform available for small to medium apps (less than 5,000 I/O points) if you factor in scalability, openess, functionality, local support, etc. Modicon is obviously pulling out, GE is still way behind on the technology and can't make up their mind, Siemens doesn't know what they want to be when they grow up, and the Asians are hurting for anything that resembles local support on American soil. To boot, A-B as a company is more open for price negotiation discusssions than they have ever been.

I'll try to remember that when they're shaking me down for support again. "Just send the money, we'll mail you what you bought, and better hurry or it'll just cost you more! All the details will be in the packet". Reminds me of shrinkwrap licenses.

Regards

cww

Anyone noticed a process running called RSOBSERV.exe? It is big brother Rockwell watching you.

I had a feeling. Do they literally see your screen or do they just log what you do?

Hi,

Wow! where to start?, Let me give you an English perspective. In the UK AB sells exclusively through ONE distributor. AB set the prices and although discounts are available, it is still _much_ cheaper to buy from abroad. As for value for money, I priced a simple PLC controlled machine (50 IO) with one 15cm monochrome touch screen, two inverters, (bus controlled) with a PROFIBUS slave interface (I didn't add in the required software) - now this is a machine I make regularly, the mechanism and switchgear remains constant, the customer specifies the PLC and inverters) so I have spreadsheets with the last prices I paid. Taking the AB solution as the Standard (100) The Siemens Solution came in at 49.6 and the Telemecanique at 72. Just my experience, I sell plenty of each system. The cost is always borne by the customer and they never complain, so I assume that everyone is happy. I'm happy too, because I fulfil my objectives using the tools the customer wants - pure zen.

Marc Sinclair

Allen-Bradley has turned from a top supplier to some what of a crook, in my mind. In the past, we used AB for everything and they have treated us in a simular manor. We have continued to use AB, but only for what our market demands. Good luck, and stand your ground. There is a lot of other quality manufacturers out there.

It wouldn't happen twice. Sounds like they've been a
Microsoft "partner" for too long.

Regards

cww

This is a common tactic with many suppliers, not just in the automation world. I would not make too much of it.

In Britain AB have decided to control prices by having only one official distributor! This certainly damages their sales in this region. Many manufacturers (including us) buy AB equipment directly from the US, saving up to 50% (nearly two dollars to the pound at the time of writing). It's a shame, A lot of AB equipment is good, but I cannot recommend it because of its high price and restricted availability.

On the brighter side, Rockwell have confirmed to me, that they would honour all warranty claims for equipment, wherever it was bought. Also, some items, the Powerflex drives for example, are now available through major electrical distributors like RS. It is worth mentioning that Rockwell technical support in Britain is excellent.

Hi,

Yes we too use 'grey import' AB equipment, but even at the 'cheap' US prices an automation solution is considerably more expensive than using other manufacturers. I agree about the tech support though - first class.

marc sinclair

I did some work for a client that was having control panels built in canada. AB's pricing there was more favorable than in the US. Even with having to ship the completed panels from Canada, the difference in parts cost (and to a small extent the slight difference in labour costs) made it economically feasible.

Bob Peterson

Hi Parkinson,

Let me know where I could save such an amount on AB products. We face similar problem.

Rgds
Gabriel

Scrounge,

WAGO would be happy to support you PLC, I/O, etc. needs and not double your prices to teach you a lesson. A anonymous said, there are many other quality manufacturers out there. If you are interested, I would love the opportunity to earn your business.

PLC with PC features http://www.wago.us/products_us/286.htm

WAGO-I/O-SYSTEM
http: //www.wago.us/products_us/289.htm

Dean Norton
WAGO Corporation
1-800-346-7245
dean.norton@wago.com

Hi,

I have used http://www.protocolconverter.com communication products (Ethernet to DH+ Bridge) in the past and DataLinks are half the price of AB's with the same reliability. There are other options out there.

Mark Sampson

This my attiude toward this. I'm just a single man operation. When I got in automation, try every automation supplier out there to get information on there products. The only one that would give the infromation was AB. They when way of there way to help in any way. That been about seven years ago, an they still do. Like I said, I'm a very small operation. I tell my customer that AB is the only product that I'll use. The qaulity is more important then the price. I'm building my bussiness on qaulity. Even if I make less money. Because I do not want to be out there in the middle trying to fix things. In seven I've been very luck or a very good product.Everybidy is worried about the price. What about qaulity!!! does it mean anything anymore!!!. You have to be very firm with your customer and supplier to get the best for everybody. You got be faithful to both of them too.

I think you will find there is not a whole lot of difference in the price of parts when you go and compare apples to apples.

Many people try to compare the price of apples and oranges, and find that they may be radically different and thus consider one or the other to be over priced.

I have not found AB to be perfect, and sometimes their tech support could be better, and occassioanly they are a bit slow at getting warranty parts out, but over all they are pretty good.

There is some company that can do each thing AB does better or for less cost, or both. But, there are few companies that have the wide range of products AB has that play well together.

Excellent point, Bob. Those ads that show Automation Direct stuff at a third the price of AB's can be misleading because they compare the Automation Direct prices against AB's LIST price. But Automation Direct actually sells at those prices, whereas AB uses a more traditional discounted price structure, so the prices ctually paid by an OEM are significantly better, though still higher than Automation Direct's. This is no slight on Automation Direct, I use a lot of their stuff and like it, just that you have to know how to interpret the price comparisons.

I have seen multipliers under 0.20 (not saying from who or for what products). I get a kick out of the people that think they get a great deal from AD or similar places. If they only knew what some people actually pay for name brand parts they might well fall over dead. And often it is just a matter of asking. Discounts are not available for low volume, but sometimes you can get name brand stuff at very competitive prices at fairly moderate volumes.

Yeah, I guess it's like a lotta things in this business, great if you are on the inside and pretty ugly if you aren't. But I think it's perfectly fair to use your multiplier to assess how much they want your business and how loyal you should be. I use their stuff when it's well suited to the job at hand but feel no particular loyalty.

I was just shook down for support which I never recall using and we pay close to list so it would be silly to go much out of my way to specify AB.
I don't have a real quarrel with straight quantity discounts, but stuff like the original writer described is pretty much unethical and I suspect illegal in some venues. It is at best an abuse of the power that unethical lock-in provides.

Vendors who work on a high volume, low markup model with the same price to all will do better in the smell test.

Regards
cww

I don't know why you think extending special discounts to preferred customers is illegal or unethical. It's the way virtually all business is done. Go to any car dealership. You will find the same car can sell for 100 different prices, depending on what organization's discount you use, who you know, or how many cars you agree to buy.

By the way, do you know for a fact that AD does not extend discounts for larger quantities? I have heard some things that make me believe otherwsie.

The main thing about AB and AD is that with AB you know the list price is the highest price you will pay, but it's likely to be somewhat lower (in some cases a lot lower). With AD, at least for most low volume users, the list price is the selling price.

Hi Bob

I'm not sure you read what I wrote. Volume discounts do make it tough for small firms to compete, but they do have a reasonable basis. It does cost less to ship in bulk and large users often create less burden per unit as they are beyond the learning curve. But demanding exclusivity with the threat of higher costs is extortion. Encouraging
exclusivity with better discounts works out to be about the same thing but is at least arguably legal as it would be hard for the benefactor to show damage. Competitors
may have a claim, but carrots provoke many fewer complaints than sticks do. But pressuring folks for exclusive use of your products has been held to be
restriction of trade. And yes, it happens all the time, particularly with monopolies and those who would be. A good example is the current case AMD filed against the
other leg of the duopoly, Intel. It's all about abuse of power to eliminate competition. Now, AD may or may not offer quantity discounts. I know at least I can get their stuff at the published price. But the whole point is moot because they simply don't have the power to abuse. Let's look at it another way. If we met on the street and you suggested I give you my wallet. you would perhaps hear a chuckle and it's fairly unlikely there would be an incident. Or I might in good humor demonstrate that it is empty and move along. No crime, no foul. But if you were to do that same thing with a pistol in your hand, it would probably end less amicably and most would agree that a crime had been committed. If you are a small integrator in a market where a large percentage of your prospects demand Buglogics, Buglogics can have considerable power over whether you survive or not. For some reason the power linkage between these scenarios is ignored or discounted because one is how people do business these days. I simply have a hard time discriminating which one. The second case would in fact, do much more damage than taking my wallet :^).

Regards

cww

Hi Curt.
You certainly cannot compare AB to the MS/Intel situation. There are a lot of competitiors to AB in all of their market segments, and GE, Siemens and Schneider are all comparable to AB in the range of products they offer, and in some respects may even exceed AB's product range.

Offering a deal on their products if you standardize on their products is not unique to AB. Nor is it immoral, illegal, or unethical as you suggest. Both sides benefit when this type of arrangement is used. The buyer gets products at a lower cost. The seller gets more volume, and it goes to people who's support and marketing cost is very low. Do not underestimate the cost of getting a new customer nor of supporting one. What AB (and others doing similar programs) have done is recognized that these type of arrangements reduce the seller's overhead substantially and they have put that in to the pricing structure.

Hi Bob. I don't see where the strategies are different, it's just less effective due to the slow and partial turnover related to the life of the products. And the various NIH and nationalistic trends in Europe that ensure that a global monopoly is unlikely. But there are certainly regional and line of work monopolies
and a trend towards less competition here in the USA. There are many "generations" of PCs for each generation of PLCs. That slows the trend.

There are a lot less brands available than in the past, and if another major throws in the towel that could well be a tipping point. If that's due to a clear and obvious superiority of product, fair enough. But if it's due to sweetheart, exclusivity deals and restriction of trade, we all lose. And if it progresses, hang on to your checkbook, you ain't seen nothing yet.

Most of the stuff that eventually leads to antitrust and other regulatory concerns is recognized. Hell, price fixing would be recognized if they could get away with it. Every once in a while when the wrong people get burned, they unrecognize some recognized methods. IBM and ATT used to use recognized
practices to very effectively control the market.

Regards
cww

I can't speak for AB in particular, but some companies are simply not interested in dealing with smaller customers or customers that don't fit their defined sales profiles. Their sales policies are simply a polite way of telling you to go away.

If you don't get the impression that someone is anxious to have your business, then take your business elsewhere. If you need a supplier more than they need you, then your business is in a bad position.

Hi Michael

I have to disagree. If the majority of your prospects, for whatever reason, specify a particular vendor, it's quite easy for your to need that vendor a great deal more than they need you. That's not to say that you need to be happy about it or patronize them, but if you need to sell to those prospects, you need their vendor of choice. I do structure my business so that I don't need vendors I don't like, but that's why I work a day job :^). I could easily climb on the monopoly bandwagon if money is all that matters. I sleep better if I work the day job and wait for honest work in my consultancy. Many folks don't have that luxury as they have overhead.

Regards

cww

Right you are, Curt.

A vendor can provide great support to the larger companies and get spec'd in. Then the vendor gives poor support and pricing to all of the smaller companies who have to buy their products only because they are approved by the larger company. The larger companies probably don't even realize that this is happening and how much it actually costs them.

For custom automation, the situation I am familiar with is where the end customer specifies what they want used in the machine. The "vendor" in this situation is wasting his time doing a sales job on the machine builder, as they just quote the machine with the components they are told to.

The end customer wants specific hardware used because they have to support the machine for the rest of its life and they can only afford to stock a limited variety of spares for their plant. Big factors for them are local stocking of
spares and quick delivery in an emergency.

I've never dealt with a custom machine builder who wasn't willing to put whatever the customer wanted into a machine. A standard off-the-shelf machine is a different story of course, but this is a smaller part of the market.

Given the above, I'm not sure just what the relationship between the "larger" and "smaller" companies is that you are referring to. Larger companies do get better multipliers, but that is true for most large businesses, not just automation. Cost of sales is lower for a customer who buys a lot of any item.

As for "poor support", I think you'll find that in many cases everyone large and small is getting "poor support" these days. Some vendors (especially some of the smaller ones) are still quite good. For many of the larger ones though, the support staff are the first to go when their company needs to make up for a bad investment elsewhere.

Unless you do big bucks with AB you don't get much of a discount. Especially in underserved areas. Offsetting that, is the fact that it's far easier to spend a lot of money with AB :^)
Even if you don't buy from them you should be very glad there is at least one vendor who wants to compete on price. And AD pays a lot more attention to my "need it nows". They have always treated me like a king......no, better, like a Customer. And fast is normal for them.

Regards
cww

In some respects it depends on what you consider "big" bucks.

If you buy a few grand a year in parts, you are unlikely to get much of a deal.

Bob Peterson

but dont allow that captive audience attitude blur your future vision... everything can change and will... and that is NOT an AB slight either. if they keep doing their job then good on them.

Any manufacturer that limits their market share by causing problems for their "once-loyal" clients is only thinking of their short term returns. It is easier to manage an account that is not totally adverse to your product than to win a new client over. The cost of doing business with new clients is more than with a client that uses other products at times and then your at other times.

AB has enjoyed the largest installed base of control products in the US for a long time. When this happens, it is very easy for the manufacturer to get complacent and its focus moves from the customer first to the company first. The tactics you mention represent that mode of operation.

I have been on all sides of this issue with many manufacturers such as AB, Siemens and Modicon. If you want to get good pricing and support from a manufacturer regardless of the size of the order or if you use our product intermittently, contact customersupport@xycom.com or contact me and I will get you the resources you desire at the pricing you need for any thing Xycom represents on the market.

Howard Love
Xycom Automation
(804) 938-4988

That all I hear is money, money and money. YES, I can sell it to you cheap. Nothing against automation direct, or any other company that makes plcs. I bought rslogix 500, never used programing software before, within 30 minutes
had a program written. AB software was very user friendly. Then bought AD software, that was 2 years ago, still have not written one line of logic with AD software. Sorry, it not user friendly. I prefer to buy software that I can use, even it cost 5 times more. I don't care who name is on the plc or software. Why should I go through another learn curve to save money? I'm going to lose more money trying figure the unuser friendly stuff out. I support quality, quality, quality.

I agree that, if I couldn't use it, I would think less of DirectSoft. But, I've never seen a programming package that I _couldn't_ use. I have seen a few that I wish I didn't have to use. And a few that make very little sense
(Step 5 comes to mind) and all are a little quirky. Many are still keyboard oriented, which I don't mind at all and few are as completely guified as RSLogix. One project in with most and you're reasonably comfortable. I suppose if you are a big Windows fan, RSLogix is about the best as you can point and click through most of a task. I'm not sure which planet the Step 7 folks are on, it's completely guified but more like a database program than a programming tool. I think that your impression of RSL is because, from the get go, it flows as a programming tool and you don't have to fight with it. The rest, to varying degrees, do little or nothing to point you towards the next step, or any step for that matter. My own opinion is that some of the DOS and DOS heritage packages are better in this respect than most of the Windows packages.

But the skunk on the table here, is that you are usually stuck with the software package kludged, bought or well crafted by the hardware vendor. I'm fairly sure RSL has sold much more hardware than the inverse. And there is a lot of good, useful, hardware that we'll never even hear of because the tools aren't there or totally suck. AD is an example. The Koyo hardware has been good enough for TI, GE, and Siemens and several lesser known others. The software is usable and the pricing is good for both. But if you could program it with RSL or their software was as "friendly" they would sell a lot more. If someone could make a decent software package that worked with several popular brands of PLC, that would be a hot item as well.
But as long as these things are bundled and proprietary, the software will be the dominant reason for going with a PLC line. And the lock-in will keep prices high. There are trends around this, but most shops are highly resistant to change and obtaining commonality most definitely requires change. But cheap isn't just cheap. And while it's fulfilling for some to use it as a dirty word, cheap is another word for pricing reflecting cost and value. I am constantly spending $3000 for a 3 voltage < 100 W power supply that I could buy generically for $100 or $21k for a wheezy old 33 Mhz 68030 computer design used as a console on a printing press. And the quality argument seems a little weak since I _am_ replacing these. Those doing the PanelView shuffle can identify at least a little. I don't mind paying for quality either, but one quickly grows weary of rape and pillage.

Regards

cww

I agree, Curt. I like RSL (though I tend to use it in keyboard mode rather than set for max gooeyness), but AD hardware is pretty good, cheaper, and in certain applications, they had a better fit as far as I/O count per module and physical rack dimensions. So I just learned to use RSL with AD hardware.

Hi,

This is a very common semantic trap. We learn new concepts in terms of ones we already know.

A simple example is learning a foreign language.

School or textbook learning leaves you always formulating sentences in your head in your primary language, then translating, word for word into the target. It is well known that going to a foreign country, connecting ideas and concepts with new words (when i feel thirsty - cervesa) is the best way of learning.

If you approach new software by finding out how it can achieve your objectives, you will have more success.

I build machines, using the customers' choice of control systems, the machines can be the same and function in the same way but the AB solution is very different from the Siemens.

Let's celebrate diversity, all of these solutions are just tools for us to fulfil OUR objectives. Don't get caught up in the MY team, YOUR team commercial mentality of the big manufacturers, they actually work for us.

Marc

Boy this one sure has had lots of response. I have been working with PLC programming for over 20 years now. If I have a critical application AB is definitely my choice. For everything else I use Automation Direct. I can write more program code with direct soft than RSlogix. The reliability of both systems has been great. It is just that with more critical and complicated application the cost justification of AB is there. And also if very complicated AB is the only thing that will do.

Now one that I have to work with but think is one of the worst bang for the buck is Siemens. I have many Siemens units that I maintain and they just aren't that reliable. Their pricing is higher than AB and for the same dollar can't deliver anywhere near the quality and reliability.

Well, That's all I have to say about that

CHP

I am amazed at your comment about Siemens pricing versus AB. Unless you are paying list price for the Siemens stuff, I don't see how that can be.

I have found a Siemens solution and an AB solution to typically come out in favor of Siemens from the hardware side of things.

And for smaller projects, an S7-200 system will run rings around a Micrologix and costs less to boot.

There is a huge learning curve in using the S7-300/400 software. It just is not especially user friendly nor is it at all intuitive like RSlogix products are.

Well it is certainly clear to see which items are the most controversial. AB makes good products and it is nice to read about the loyal following that they have, they have made great in-roads in industrial communication. However, when they need to resort to the type of pressure tactics explained here, that should conjure up some quesions in everyone's mind. If they are so good why must they resort to those tactics?

Our products http://www.equustek.com compliment and compete, to some degree, with AB and it is because of things like the fact that they do not any longer include DH485 in their new processors that allow us this niche. Also we do DF1-DH+ which they don't. As was indicated in a previous posting, our pricing is less than half ABs and we have been around for 12 years and guarantee the reliability of all of our devices. The list of our customers include most of the "Fortune 500" companies and beyond. Many of the names included in these replies are customers as well. Our only distributor was DataLink Technologies Group (http://www.protocolconverter.com), however since last year we have added GridConnect, CPU Automation, BWI, Controlmatics and Industrial Solutions Inc. Our DL line of products has withstood the test of time and should not be overlooked should you take offence to the previously noted sales & marketing strategies/pressures. I would venture a guess that what ocurred in this situation is the exception not the rule, at least I would hope so.

R. Huth
Equustek Solutions Inc.
bhuth@equustek.com

Stop right there. Every business feels global pricing pressure. Don't cave to this greedy vendor. Pump out some product with no A-B at all. Your customers will like the new pricing.

Rexroth, Telemecanique, Yaskowa, ABB, Omron, Siemens, to name a few, would love a slice of your pie. Make it your goal to lower your prices, and get on the phone. I think it is extortion what A-B is doing and when they come back with cheaper switches and drives I hope industry remembers what they really are.

JKB Canada

I have found similar pressure from them as well, I though maybe because we are a little shop, we were being unfairly treated. Between the pricing and the push for the other terminal block series, and not knowing when the W will cease to ship has really put me in a scramble to find a new reliable source.
I found one too.

Automation Systems Interconnect- I also looked at the others but found that they are very cost effective for me, 30% less. I know to some it is not so much to me it is a fortune.

Try Advance Controls, Inc. (ACI) DIN rail Terminal Blocks. Great Prices & Service! 800-559-9224. http://www.acicontrols.com