Program Concept
Wayfinders Members who agree to sell their goods and services at a 10 per cent discount to other Wayfinders Members are eligible for a 10 per cent discount on purchase of goods and services from other Members. This will encourage Members to support one another in reducing the costs of doing business. This program is done in conjunction with a 4R program.
Wayfinders is a co-operative designed to serve the interests of its Members who are in small business, co-ops or non-profit organizations. It provides an economy of scale for its Members, so they are better able to compete in their markets and remain viable.
Case Scenario
A Member has indicated agreement to offer all goods and services to other Members at a 10% discount from regular prices in exchange for access to 10% discount on purchases from other Members. When the Member invoices a Member the invoice will automatically add a 10% discount (minus ten per cent) to the total amount owing.
Rationale: Transaction Costs
Small businesses, co-ops and non-profit organizations have many costs. A hidden cost is the cost of finding new customers suppliers and partners. These costs are a type of Transaction Costs[1]. If you are spending your own time and effort locating these businesses, you may not have a dollar figure to account for that time and effort. If you spend money on advertising, or pay a buyer, broker or salesperson, the transaction costs are more clear. Other transaction costs include the costs of preparing quotes or proposals, bargaining, contracting and enforcement of agreements. Of course, there are associated emotional costs as well.
Companies reduce transaction costs when they can secure long term, trusted and competent customers, suppliers, and partners. This program encourages Members to work with other Wayfinders Members routinely, thereby reducing transaction costs and justifying a 10 per cent discount.
Wayfinders Members are fully responsible for the transactions they undertake with other Wayfinders Members or other businesses or organizations.
Why Ten Per Cent?
Different kinds of business, goods and services have different transaction costs associated with them. It isn’t always going to be exactly 10% of costs. However, for the sake of simplicity, Wayfinders has chosen 10% as a standard. It may not suit everyone. Members are free to offer and negotiate other discounts as they normally do outside of Wayfinders.
The 4Rs
Wayfinders is building tools in our platform to support B2B transactions. The use of the four R’s – reputation, referrals, recommendations and return customers — has been a highly successful common practice in business. Organizations develop their brands of honour and reputation as a kind of intangible investment that is expected to continue to generate business over time. In other words, the 4Rs help to reduce transaction costs.
Wayfinders is building tools to support the 4Rs in it’s platform. Members will be able to refer and recommend other Members, and they can encourage repeat customers with use of longer-term agreements. Longer-term agreements is a way to achieve economies of scale. They allow suppliers to reduce set-up costs and other transaction costs and thereby reduce the price the customer must pay. The supplier passes savings on to customers as a reward for signing the long-term agreement.
Different industries have different traditions and conventions for these 4Rs.
[1] “Transaction costs are the total costs of making a transaction, including the cost of planning, deciding, changing plans, resolving disputes, and after-sales.[“ https://en.wikipedia.org/wiki/Transaction_cost
