Blog · Wallet share and penetration
Compare purchase prices, freight, ordering effort and transition costs from the customer's perspective. Separate cash savings, released time and uncertain benefits.
A customer does not buy a wallet gap. It considers whether a proposed change helps its own operation at an acceptable cost and risk. A supplier-switch business case translates the offer into that customer's purchasing economics instead of presenting the seller's opportunity value as a customer benefit.
The account-growth review business case evaluates an investment in analysis. This guide evaluates a different decision: the customer's change from an existing supplier arrangement to a proposed one.
Specify quantities, specifications, locations, service requirements and the comparison period. Include the customer's present arrangement, a proposed alternative and the option of keeping the current supplier. A cheaper product with a different operating specification is not a like-for-like saving.
Use customer-approved records and estimates. A seller can provide its quoted prices and lead times, but should not invent incumbent prices or internal customer labor costs. Mark uncertain inputs explicitly and ask who can confirm them.
The switching-window guide reviews whether the change is currently accessible. A positive economic scenario does not override the customer's agreement or purchasing process.
Purchase prices and freight charges are cash outlays. Reduced ordering time may release staff capacity without reducing payroll. Inventory changes may tie up cash and create carrying costs under the customer's own financial assumptions. Keep these categories visible.
Transition costs can include approved testing, staff preparation, implementation and temporary duplicate supply. Count costs only where they apply to the proposed scope. Do not claim a standard switching-cost percentage.
Where the customer provides a value for released time, label it as an economic estimate. The same hour cannot be counted as both avoided payroll and extra productive capacity unless the customer explains distinct effects.
The DEMO-501 amounts below are invented USD estimates for equivalent annual purchasing quantities and service. Ordering effort is valued at an assumed $45 per hour.
| Component | Current arrangement | Proposed arrangement |
|---|---|---|
| Product purchases | $100,000 | $94,000 |
| Freight | $3,000 | $1,000 |
| Ordering effort | 120 hours: $5,400 | 80 hours: $3,600 |
| Annual economic total | $108,400 | $98,600 |
The annual economic difference is $9,800: $6,000 product price, $2,000 freight and $1,800 released-time value. Only the first $8,000 represents reduced cash purchasing outlay under these assumptions. The remaining $1,800 is capacity value, not automatically payroll saved.
With $4,000 of one-time transition costs, first-year economic benefit is $5,800 and first-year cash purchasing benefit is $4,000. This excludes taxes, financing and other costs not modeled. The amounts are conditional estimates, not customer results or a promised return.
If the proposed annual product price is $98,000 rather than $94,000, the economic difference falls to $5,800 before transition and $1,800 in year one. If ordering time does not change, remove its estimated benefit rather than retaining it because it appeared in the original proposal.
Suppose additional inventory is expected to cost $2,000 annually under a customer-approved carrying-cost estimate. Under the original price case, annual economic benefit becomes $7,800 and first-year benefit $3,800. The extra inventory cash required should also be visible; an annual carrying-cost estimate is not the same as the initial cash tied up.
The SBA's business-planning guidance provides general cost and break-even context. These supplier scenarios are original illustrations, not prescribed financial assumptions.
Ask whether fewer deliveries or orders create value in its actual workflow. A consolidated delivery can reduce administration while creating a storage problem. The order-size and delivery-frequency guide supports investigating that tradeoff.
Use a bounded supplier trial where it can test a material assumption. Record which benefits the trial can observe and which still require longer-term evidence. A short trial cannot establish every annual saving.
Publish comparable scope, annual cash difference, released-time estimate, one-time costs, downside cases and unresolved inputs. The customer can then choose to test, revise, defer or reject the proposal without being asked to accept a single optimistic total.
Read this beside the completed customer-growth review. Bring an authorized cost sample to Covirage contact to agree the comparative view and review scope.
No. Released time creates capacity, but becomes a cash saving only when spending is actually avoided. Show the two benefits separately.
Not alone. Compare specifications, quantities, freight, service, inventory effects and transition costs on the same scope and period.
This evaluates the customer's economics of changing supply. The account-growth review business case evaluates the buyer's investment in an analytical review. Neither is the supplier's contribution calculation.