Speaker and leadership coach
Price vs. Value
Many people are only beginning to understand the difference between PRICE and VALUE. A common mindset is that many of us love a bargain so much that we fail to see that paying for value is often better in the long term. Worse, we constantly try to chip away at the price of something we already know will fulfill our needs.
A costly, but timeless designer dress that you love wearing regularly is much better value than something you paid much less for, but wore just once. The single most expensive piece of climbing equipment I ever bought was in 1997, a custom-built rucksack that has since seen me through life-and-death struggles on 15 expeditions worldwide. It’s been my ‘best buy’ in my climbing career, outlasting and outperforming countless other pretenders.
When we buy services, we should be looking at the outcome we want, and then see what we can do to achieve the outcome. In corporate Asia, what happens is that potential buyers come with a price in mind.
They may focus on a workshop venue, meals, type of content and methodology, but are clueless about what they want as an outcome. They are focused on meals, activities and topics instead of an outcome that makes a difference in the workplace. They have an order-taking, tick-listing mentality at best.
When they decide on a ‘cheaper’ provider, the result is that their ENTIRE investment is often wasted because it didn’t quite achieve their outcome. Instead, if they paid more for a solution that worked, the worst result would be that they had paid a bit more than they should have.
But they received a 100% of the result.
Assessing the price vs. value issue
How important is a specific outcome to you?
The higher importance, the more you should be looking at value rather than price. If two providers are offering similar propositions, but one is somewhat more expensive, perhaps you will need to establish the reasons for this – and these may include top notch references, testimonials, sustainable quality, past history, relationship and trust aspects.
This includes having some leeway on financial budgets so you can obtain a far better value outcome by, at times, paying a bit more than you had planned.
Ask Ask Ask:
Asking questions about relative costs, labour, skill, and uniqueness are all essential in determining if the premium you are paying is really good value. A service, product or provider that relies too much on marketing and hype, and far less on substance is likely to do less well in a less emotional environment such as B2B ventures and decisions. I am not saying emotion does not play a role. However, while we still like to do business with people we like, in a B2B environment, we tend to ask the harder questions; less so in a B2C scenario where emotions play a bigger role. After all, nobody needs a $100 Dolce and Gabbana cotton T-shirt, but many pay for one.
Nothing was ever the cheapest and the best. And don’t forget the law of diminishing marginal returns applies. Getting 20% extra value from a whole array of everyday and corporate services often demands an additional investment of up to 100%. But if you are convinced the impact, and quality of outcomes will result, then it may be worth paying the extra. Classic examples are cameras. For less than US$15, you can get a disposable camera to take party snapshots. But for something a bit better in terms of options, control, features, you would need to fork out around US$150 and for better resolution and such, double that amount – and so on.
When you have a serious heart condition, do you ask people to find you the cheapest heart surgeon around? Every single client of ours who said our fees were high came back to apologise afterwards because of the tremendous value their staff obtained from the presentation. Again, price vs. value.
One of the founders of modern Singapore rock-climbing, Lawrence Lee, gave me a piece of advice worth remembering nearly 20 years later. “Buy the best you can possibly afford”. Halfway up the mountain is no place to find out the true meaning of quality. Tell that to my friend who ‘saved’ US$100 by buying a cheap backpack to see it fall apart on
The first Singapore Mt Everest expedition in 1998 which I led cost over the four year project hit just over US$600,000. But the countless people who have been inspired by our own small mark in Singapore history, and have gone out to achieve their own dreams is value that is priceless. Value remains long after you have forgotten what you paid for something.
The great investor Warren Buffett described that price-value relationship best when he said, “Price is what you pay, value is what you get.”