How Do GPOs Make Money?

Group purchasing remains one of procurement's best-kept secrets. Not because the concept is new, but because misconceptions about how GPOs work and how they make money still circulate in the sourcing world. Some procurement professionals worry that a GPO will lock them into contracts. Others assume that "free membership" must mean there's a catch somewhere. And many simply don't know enough about GPO fee structures to evaluate them confidently.

This article answers the most common questions about how GPOs are funded, what fee models exist, what to watch out for, and how Una's model specifically works. Understanding the economics of group purchasing is the foundation for evaluating whether a GPO is the right fit and for comparing options once you've decided to explore it.

What is a GPO?

A group purchasing organization leverages the collective buying power of its members to secure discounted pricing from suppliers and vendors. Any organization regardless of size or industry can access pre-negotiated contracts with national suppliers, achieving pricing tiers that would otherwise only be available to large enterprises spending at significant volume.

GPOs are most commonly used for indirect spend categories: office supplies, shipping, food service, facilities maintenance, IT, uniforms, travel, and similar goods and services that every organization needs but that rarely receive dedicated procurement attention.

For a broader overview of how GPOs fit into a procurement strategy, see: How Do GPOs Work Within My Overall Procurement Strategy?

A Brief History of GPOs

The first group purchasing organization was established in the healthcare industry in 1910 as a way for hospitals and clinics to save money on supplies and medications. The model grew slowly at first, accelerating significantly after the establishment of Medicare and Medicaid created more complex procurement requirements for healthcare providers.

Today there are over 600 GPOs serving healthcare providers in the United States. In 2019, GPOs saved the healthcare industry an estimated $34 billion and are projected to reduce supply chain costs by more than 13% over the following decade.

After proving itself in healthcare, the GPO model expanded into other verticals like hospitality, dental, veterinary, and eventually broad-based horizontal GPOs serving private sector businesses across all industries. Horizontal GPOs focus on indirect spend categories common to nearly every organization, which is where collective buying power delivers the most consistent value regardless of member industry.

How Do GPOs Make Money?

Understanding GPO fee structures is the single most important thing to clarify before joining one. The model a GPO uses directly affects your net savings, your flexibility, and how aligned the GPO's incentives are with yours. There are three main approaches.

1. Supplier Administrative Fees

This is the most member-friendly model and the one used by most reputable GPOs. When a member makes a purchase through a GPO contract, the supplier pays the GPO an administrative fee, typically a small percentage of the transaction value. The member pays nothing extra, and the pricing the member receives is the negotiated contract rate with no markup.

For healthcare GPOs, the contract administrative fee typically ranges from 1.22% to 2.25% of purchase value, paid by the supplier. The model works for suppliers because the GPO delivers committed, aggregated volume that would otherwise require individual sales effort to develop. The GPO's incentive is aligned with the member's: the more value the GPO delivers to members, the more members buy through its contracts, and the more the GPO earns from supplier fees.

2. Member Fees

Some GPOs charge members directly through one-time onboarding fees, annual membership dues, or participation fees tied to spend volume. These fees reduce your net savings and need to be factored into any ROI calculation before you join. A GPO with member fees can still deliver positive returns if the pricing advantage is strong enough, but the headline savings percentage needs to be evaluated net of fees, not before them.

When evaluating a GPO that charges member fees, ask specifically: what is the total annual cost of membership, and what is the minimum savings required to break even on that cost given our expected spend volume in covered categories?

3. Minimum Purchase Requirements and Commitments

This is the model that catches the most organizations off guard. A GPO may advertise free membership while burying minimum purchase volumes, long-term commitments, or penalty structures in the contract terms. Organizations sign up expecting flexibility and discover later that they're locked into purchasing commitments that limit their ability to maintain existing supplier relationships or respond to market changes.

This doesn't mean GPOs with minimums are bad — it means the commitment structure needs to be fully understood before signing. Ask directly, in writing: is there a minimum purchase requirement? What happens if we don't meet it? Can we cancel membership at any time without penalty?

What to Watch Out For When Evaluating GPO Fee Structures

Fee structures are rarely presented in directly comparable terms across different GPOs, which makes side-by-side evaluation difficult. A few specific things to clarify with any GPO you're considering:

• Is the cost analysis free? The initial spend analysis, where the GPO benchmarks your current pricing against their contracts, should always be free. If a GPO charges for this, that's an unusual structure worth scrutinizing.
• Are there fees beyond the stated membership fee? Some GPOs have tiered access. Basic membership is free but full contract access or dedicated advisory support requires a paid tier. Understand what's included at the membership level you're considering.
• How transparent is the supplier fee disclosure? Reputable GPOs are willing to disclose the administrative fees they receive from suppliers on request. If a GPO is reluctant to share this information, that's a signal about how transparent the broader relationship will be.

For a comprehensive framework for evaluating GPO options side by side, including a five-section checklist covering fee structure, category fit, savings, support, and flexibility, see The GPO Evaluation Playbook.

How Una Makes Money

Una uses the supplier administrative fee model exclusively. Membership is always free with no onboarding costs, no annual dues, no minimum purchase requirements, and no contract lock-in of any kind.

Every time an Una member makes a purchase through an Una contract, the supplier pays Una an administrative fee. Una uses that fee to finance its services, which is what makes membership permanently free for members. Members can join, access all contracts, and cancel at any time with no financial consequence.

The economics make intuitive sense from the supplier side too. Suppliers pay the administrative fee because Una delivers committed, aggregated purchasing volume that is significantly more efficient to service than individual customer acquisition. The contracted volume guarantee is worth the fee which is why suppliers are willing to offer Una members pricing they wouldn't offer to the same organization negotiating independently.

In other words, Una makes money by saving you money. The more value Una delivers to members (and the more members buy through Una contracts) the more Una earns from supplier fees. The GPO's incentives and the member's incentives point in exactly the same direction.

What Una Does Not Charge For

To be specific about what's included at no cost to Una members:

The initial discovery call and spend analysis are both free. Una's Sourcing Advisors benchmark your current pricing against Una's contract terms category by category before any commitment is made. Year-end spending reports, ongoing cost analyses on additional categories, dedicated Member Experience support, and supplier issue escalation are all included as part of membership at no additional charge.

Una also does not require members to purchase exclusively through Una contracts, commit to minimum purchasing volumes, or maintain membership for a minimum term. Members choose which contracts to activate and remain in full control of their purchasing decisions throughout the relationship.

Does Free Really Mean Free?

It's a fair question and the honest answer is yes, with one important clarification. Una's membership is free in the sense that members pay nothing directly to Una. The cost of the GPO's operations is funded by suppliers, not members.

What isn't free is the time and effort involved in onboarding — going through the discovery call, preparing spend data for the cost analysis, and transitioning purchasing to new contracts takes internal resources. For most organizations that investment is minimal relative to the savings realized, but it's worth acknowledging that "free" refers to direct financial cost, not zero effort.

Una members save an average of 18–22% across indirect spend categories including office supplies, shipping, food service, technology, travel, facilities maintenance, and more.

For a full picture of what membership includes and what the onboarding process looks like step by step, see: Guide to Una Membership.

Ready to See What Una Can Save You?

The starting point is a free discovery call and cost analysis — Una's Sourcing Advisors benchmark your current pricing against Una's contract terms so you see the actual savings potential in your specific categories before making any commitment.

Reach out to our team to get started!