Bradley’s Law is fundamental to the technology behind Lytica’s products. Lytica has unparalleled visibility into electronic component pricing. As such, we can debunk the common misperception that price is directly related to volume. At the component level, there is no positive correlation between the two. Lytica attributes the randomness of component-level pricing to both Supply Chain complexity within the industry and the notion that pricing is the function of many variables – not merely volume.
Supply Chain Complexity refers to the complex and “arms-length” style Supply Chain which is highly secretive and vast. With such a large number of component suppliers, there are many permutations and combinations of electronic solutions. In addition, the industry is inherently deflationary thanks to Moore’s Law.
Many variables impact component prices. Bradley’s Law – which states that a company can expect to pay a price commensurate with their competitiveness within a particular commodity – underpins our pricing technologies and considers many variables that can impact price, in addition to volume. Lytica considers variables such as commodity spend, channel, geography, alternate sources and many more factors in pricing. Ultimately, Lytica provides the science and your buyers provide the art in negotiations.
Rather than focus on volume, think in terms of how badly this supplier wants my business and why as well as how much do I need this supplier and why. The interplay between these forces results in your price.