Friday, October 21, 2011

Those Chemicals Really Aren't That Expensive

I mentioned the other day the high price of a polymer that I was trying to order lab quantities of. We've all experienced this some degree, and my point was not to pick on any one supplier, or even question why their prices are so high. I blindly accept that there are good reasons for it, or someone else would set up shop, undercut their prices and win big (Why yes, I do believe in efficient market theory! Why do you ask?)

My supervisors on the other hand, assume that the prices that I am initially charged indicate that the chemicals that I am working with are too expensive to work with in the long run and that I should be working with something else that is cheaper. The best argument I have found to set them right is this: look at the same catalog for a commodity chemical such as isopropyl alcohol (IPA) or polyethylene, and see how much that is marked up. Depending on the exact catalog and purity, a liter of IPA goes for $30 or more, even though I can go drive 2 minutes down the street to the K-Mart and buy the equivalent for a couple of bucks. So if the chemical I am ordering is going for $60 bucks a liter, that says to me that in bulk it will be about $4 a liter. When I put these numbers in front of my supervisor, suddenly all the talk of expensive chemicals goes away and I can proceed in peace.

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