Why are Center Discounts Capped?

The Core's budget is calculated to break even as closely as possible. We are not allowed to generate
a profit or run at a loss
. The budget is reviewed periodically by the Cost Reimbursement Office to
ensure that we are abiding by these terms.

One consequence of this 'break-even' dictum is that the Core cannot itself give discounts. There is no
money to do this, and we have to get back our costs somehow. Each dollar spent must be recovered
in recharges and every recharge directly reflects the real operating costs.

Fortunately, various Center Grants are willing to provide some funds to help defray the cost of
sequencing for its members. There are some specific restrictions on this policy:

  • The Core cannot lose money - so the discounts we offer MUST be offset, dollar-for-dollar,
    by funds appropriated by the Center.

  • We must therefore track Center discounts. We terminate the discount when its payout equals
    the amount originally given the Core (the 'Center' cap)

  • What if the Center Cap is hit, and you - a bona-fide Center member - hadn't been sequencing and
    therefore got none of the discount? That would seem very inequitable to you. The 'PI Cap' was
    instituted to help distribute the discounts more equitably
    . Each PI is granted discounts only
    up to some limit representing a fraction of the Center's total discount value. Thus, no single lab
    or subset of labs can drain the discount before others even get a chance. With PI Caps, even low-
    volume sequencing labs still get a piece of the discount pie.

  • To make sure that the Center gets its money's worth, we set the PI cap rather liberally; some PI's
    won't use their share, so others get a larger slice of the pie. The Core Director periodically
    evaluates the Caps throughout the Fiscal Year to verify that they are set correctly.

  • If some Center isn't being used much, the center Directors (and the funding agency) may be reluctant
    to continue Core funding. The Director tries to monitor such situations and will take appropriate
    action, perhaps raising the PI Cap or emailing reminders to the PI's.

The Core doesn't benefit from Center Discounts?

The DNA Sequencing Core neither profits nor loses via its agreements to provide Center discounts. We
have to give back almost every dollar we take in from a Center, and in fact managing Center discounts
with all their attendant records-keeping and status reports, can be quite a headache. We do, however,
derive indirect benefit from them. The biggest benefit is simply that UM researchers are encouraged to use
the Core if they get price breaks. The more sequencing we do, the cheaper it gets - simple economics
of scale. This is why the Core Laboratory system was created in the first place.