And you shouldn’t have to hear it!

The word of the day is still outcomes, and, no matter where it’s used, it’s still a dirty word.

Yesterday we gave you many examples of where outcome-based pricing has become the norm which includes, but is not limited to:

• GPOs
• Recovery Audit Firms
• AI-first services-as-software
• Big Consultancy projects

and where every single situation the entire point of the “outcome”-based sales pitch was just a ploy to convince you to pay more for less because

• suppliers will happily match GPO prices for reasonable commitments as they have to pay the GPO a 1.5% to 3.0%+ administrative fee to get that business, and, moreover, at the head of the tail you can always get as good, if not better, prices using a tail-spend sourcing solution that automates 3-bids-and-a-buy RFQs and auctions (in a standard format that allows suppliers to automate bids) … and this solution often costs a fraction of what you will pay the GPO based on transaction fees (and then the additional savings from being able to quote every category at the head of the tail and not just what the GPO offers adds up to a greater savings)
• proper retail-centric e-Procurment augmented with supplier and product management could prevent 90%+ of overpayments to begin with (and Lavante, Inc. proved that over a decade ago — why else would PRGX have acquired it and taken it off the market)
• for every reliable AI-first services-as-software solution (as we all know that hallucinatory Gen-AI enables and amplifies fraud, security risks, bad decisions, etc.), there is a traditional SaaS alternative for a fraction of the price that does the same thing if you can do without the natural language chatbot interface and a slick UX
• once a consultancy gets you on outcome-pricing, they are going to focus on projects where they know you are doing particularly poorly, employ junior grunts with five year old playbooks guaranteed to increase efficiency and reduce costs (because you are way above market average cost or way below market average efficiency), and use AI to generate their reports and strategy presentations (and hope the junior grunts both do their job and catch all the hallucinations in the prepared documents)

But, as we said in our last post, that’s not the worst of it.

The worst part of all these “outcome”-based pricing offers is that they are masquerading the grift that keeps on taking! (Which is something any American reading this should be quite familiar with by now!)

It’s not the overcharging that is the most insidious part of “outcome”-based pricing models, it’s what’s behind them.

• GPOs want you to turn over more and more and more of your procurement to them because, the more you turnover, the more you reduce staff, and the more dependent you become … locking you in for years to come as your fees skyrocket to the point where you’re paying more to them then it would cost you to buy a modern sourcing to settle solution (that supports regular and semi-automated tail procurement and a couple of buyers [who will simply review any tail-spend awards that are new or out of bounds compared to past awards and select the suppliers for regular sourcing events, which the platform will automate until award time])
• recovery audit firms want you believe only they can keep millions in your pockets and software will never solve the rampant overspend the suppliers siphon out of you, will do anything they can to further the narrative that you’re going to lose millions without them, that you shouldn’t even try to improve your procurement processes, and it’s best to just turn more spend over to them … again locking you in for years and years when you could be taking steps towards reducing your overspend to almost 0 with the right technology, processes, and senior category managers preventing that overspend from ever happening
• AI-first service-as-software firms want you to go all-in on their service, fire your buyers, and believe that only their tech can get stellar results before compute costs go through the roof, the AI bubble bursts, and/or everyone realizes that the whole thing is being orchestrated by the Wizard of New Oz, it’s a bigger circus than anything P.T. Barnum ever managed to assemble, and when the curtain closes, all you’ll be left with is empty pockets (and, when you’re not looking, just like the auto-classifiers of old, they will throw as many Another Intern at the problem as required to ensure you succeed)
• the consultancies don’t want you do anything yourself because once you realize that, if you hire qualified people and installed modern systems, you can do it just as good yourself, do it for less, and save a lot of money … so they will try to keep up the savings and strategy show as long as they can

In other words, the whole goal of “outcome”-based pricing is to take away your self-sufficiency, capability, and even knowledge and ensure your entire existence is 100% dependent on them. That way, they stay super profitable at your expense with the grift that keeps on taking!

At the end of the day, the only vendor who won’t price on outcomes is one that knows they can’t actually deliver any, even with fakery, because any vendor who can will find a way to use this trend to inflate prices and grift your hard earned gains!

P.S. You shouldn’t be surprised. It’s the same old story with a new name. It’s been going on since the first modern Procurement solution hit the market.