Buyer Pricing
2017
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BUYER PRICING
Working together in 2017
and beyond
Better Work is introducing a new global pricing plan which better reflects
changes in our operational approach and our value proposition, and
strengthens our long term viability. A stronger and more viable Better Work
will be a better partner for you and all our stakeholders in the years to
come.
The prices will be introduced progressively over a three year period starting
in 2017. These prices continue to represent only a portion of the costs of
delivering the programme, with the remainder being subsidized by
international donors.
Rationale
Better Work pricing for buyers and factories has not been revised since 2012, during
which time Better Work has evolved significantly:
♦ The programme has doubled the number of factories (1300) and workers
(1.5million) in scope and is expanding quickly. More resources are invested in
building the capacity of workers and managers in factories to make
sustained improvements and our services now focus on maximizing these
impacts.
♦ Working strategically with other ILO programmes, Better Work is helping to
build the capacity of national institutions to improve the governance of
labour markets, including reform of labour laws, strengthening labour
inspection capability and social dialogue.
♦ Globally, Better Work is developing partnerships with a growing number of
leading brands and facilitates their engagement with each other and global
industry stakeholders. Better Work continues to expand services to and
strengthen engagement with these partners.
♦ Better Work has developed a unique and compelling evidence base of the
benefits of improved job quality to workers, firms and society which ILO
A stronger and
more viable
Better Work
will be a better
partner.
”
3
BUYER PRICING
and IFC utilize in influencing the dynamic policy debate on jobs and
development.
♦ Better Work is now one of five Flagship Programmes of the ILO.
♦ Better Work has an obligation to its donors and institutional partners to
maximize the revenue from the private goods it offers to support efficient
and sustainable service delivery.
♦ Independent market research shows that these changes add significant value
to global retailers, brands and their suppliers and that there is a willingness to
pay more for our services.
Principles behind Better Work’s
Pricing
♦ Consistency: The pricing plan, for buyers and factories, will be applied
consistently in all country programmes.
♦ Fairness: Prices are set in accordance with the ability of enterprises to pay
and the level of effort required of Better Work to service their needs.
♦ Transparency and predictability: The fee structure has been widely consulted
with partners and made publically available. Gradual implementation over
three years will provide businesses with the ability to adjust to the price
increases.
♦ Administrative ease: The pricing structure and associated procedures should
provide for administrative ease in calculating, invoicing and transaction
costs such as distribution of factory reports. To that end, the current credit
system is being phased out and progressively replaced by a secure, on-line
report access system.
♦ Developmentally sensitive to the needs of small and medium size factories:
Better Work acknowledges SMEs may face particular challenges considering
their size and resources. Where a clear public good justifies their inclusion,
Better Work will seek to enable their participation via other means such as
adapting the services delivered or seeking funds to subsidise SME
development.
♦ Cost recovery: Prices are established to reflect the actual costs of services
delivered to factories and Better Work continues to focus on increasing the
efficiency and sustainability of the service delivery model. In circumstances
where prices are set in negotiation with national constituents or as part of a
bi-partite trade agreement between member States, Better Work shall
advocate for full cost recovery and seek public funds to subsidise any gap
until this aim is realised.
Prices are set
in accordance
with the ability
of enterprises
to pay and the
level of effort
required from
Better Work to
services their
needs.
”
4
BUYER PRICING
♦ Buyer agreements: A fundamental principle of the new pricing policy is that
Buyer Partners adhere fully with their commitments to cease duplicative
auditing. In this way, both buyers and factories obtain the maximum value
for money for the fees charged by Better Work.
♦ Progressive expansion of country programmes: While acknowledging there
may be significant overlap of buyer factories, country programmes will create
strategies to progressively expand coverage of new factories and plan and
negotiate reasonable lead times with Buyer Partners.
Price Structure
The pricing plan to be applied to Buyer Partners and Participants is outlined below
and is being progressively rolled out over a three year period.
Buyer Partners
In accordance with the principles mentioned, the price to be charged to Buyer
Partners will be revised as follows:
Buyer Partners are charged a single fee comprised of two components. The perfactory report subscription fee is being eliminated.
♦ Fee component 1: Buyer Partners will continue to be charged a component
based on their apparel revenue.
♦ Fee component 2: Buyers will also be charged a component based on the
number of factories in Better Work countries as a proxy for the level of effort
required to service the buyer’s needs at the country programme level (the
“market footprint “component). It is important to understand this is not as a
cost per factory in the programme.
Fee scales are designed, to the extent possible, to avoid excessive increases in the
first year compared to the costs which the Buyer Partners would be paying if all their
factories were enrolled in the programme. A breakdown of the fees is provided in
Tables 1 and 2 below.
* If a Buyer Partner
introduces a significant
number of footwear
factories, footwear
revenue may be
considered in the
revenue component.
Buyer Partners
will be charged
a single fee
comprised of
two
components.
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BUYER PRICING
TABLE 1: BREAKDOWN AND PROGRESSIVE INCREASE
OF FEES BASED ON APPAREL REVENUE (COMPONENT 1)
Apparel revenue
Fee per annum (USD)
USD per annum
Band
Year 1
Year 2
Year 3 onwards
Less than 0.5bn
A
4,750
6,000
7,600
0.5bn - 1bn
B
9,500
12,000
15,200
1bn - 4bn
C
16,600
21,000
26,500
4bn – 10 bn
D
32,800
41,400
52,200
10bn - 15bn
E
50,400
63,600
80,200
More than 15bn
F
94,500
119,100
150,100
TABLE 2: BREAKDOWN AND PROGRESSIVE INCREASE OF FEES
BASED ON “MARKET FOOTPRINT” (COMPONENT 2)
No of factories in
BW countries
Band
Fee per annum (USD)
Year 1
Year 2
Year 3 onwards
1 – 15
1
4000
5,100
6,400
16 - 25
2
6000
7,600
9,600
26 - 50
3
10,000
12,600
15,900
51 - 100
4
17,500
22,100
27,900
101 – 200
5
30,000
37,800
47,700
200 – 250
6
55,000
69,300
87,400
(>250)
7
65,000
81,900
103,200
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BUYER PRICING
INTRODUCTORY OFFER FOR NEW BUYER PARTNERS
Better Work recognizes that building the right foundation to derive full value from the
Programme and fully meet the partnership commitments may take time. To reflect
this, Better Work is offering new Buyer Partners a reduced price of 50 per cent in the
first year.
INTERMEDIARIES AND ATYPICAL BUYERS
Better Work is creating a new pricing model for intermediaries and atypical buyers to
better reflect the varying and moving parts of most global supply chains. The
proposed pricing model is currently under review by Better Work Management.
Buyer Participants
Fees For Participants (USD) Per Factory
Subscription
Price
Above 60 factories
$ 1100
41-60 factories
$ 1200
21-40 factories
$ 1300
10-20 factories
$ 1400
Fewer than 10 factories
$ 1500