Buyer Pricing 2017
2 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 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 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.
5 TABLE 1: BREAKDOWN AND PROGRESSIVE INCREASE OF FEES BASED ON APPAREL REVENUE (COMPONENT 1) Apparel revenue USD per annum Band Fee per annum (USD) 2017 2018 2019 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) 2017 2018 2019 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
6 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 100 factories $ 1000 60-100 factories $ 1100 41-60 factories $ 1200 21-40 factories $ 1300 10-20 factories $ 1400 Fewer than 10 factories $ 1500