What Price Value?
So 12th Man's Lady had a bit of rant on Social Media yesterday but one which surprisingly received a number of thumbs up from fellow rantees! So what was it this time that had got me all hot and twitchy? For about the 15th time in one afternoon I read a post on Facebook asking for a tradesman who could 'Start tomorrow, do a fantastic job and is cheap' - for a start, surely two out of those three elements are mutually exclusive i.e. fantastic and cheap. Rarely in all my years have I experienced fantastic and cheap in the same transaction, apart from perhaps that Club 18-30 to Ibiza which seemed fantastic at the time...but the less said about that the better! So, what is it about modern consumerism that seems to make people think they can demand quality and expertise but not have to pay for it?
It reminded me of a story that broke earlier this year regarding The Merchant Hotel in Belfast who were introducing a new range of bottled water including one priced at £26 ( http://tinyurl.com/p8abob8). Sourced from the Canadian Artic Shelf the main characteristic that was reported is a 'smooth, neutral taste' - yep exactly the result you want after shelling out £26, smooth and neutral! Coincidentally, it broke around the same time as news coming out of the dairy industry that farmers were potentially going out of business due to the below cost prices they were getting for milk (http://tinyurl.com/odub8o3). It seemed a somewhat bizarre situation that the value of a nutritionally beneficial element of a balanced diet which also supports UK farming seemed to be held in less regard than a bland and expensive, imported alternative to what comes from the tap at a much lower cost. Without getting political it made me question what we really value with so much choice and availability in this day and age.
When it comes to setting price it is perhaps easier to understand the value of products where you can calculate the costs of their component parts (goods, labour, utilities), however, when it comes to pricing up a service it's a much murkier world! How do you put a price on someone's time? And are they just charging for the physical amount of time they spend completing a job for you, or is there also a cost to the years they've spent crafting their trade, or building relationships with people you want to influence? Demonstrating value is an area that service businesses seem to continually struggle with so because it's something clients understand more easily, pricing is usually structured around units of time. Does it really matter how much time someone spends doing a job...surely the outcome i.e. quality completion and meeting your expectations is what you're paying for not hand-cuffing someone to your pay-role for a set amount of minutes
My Grandad was a pretty shrewd Yorkshire businessman and I’ll always remember the phrase ‘Buy Cheap, Buy Twice’ which he drilled into us as children and which underpins the theme of this semi-rant. We’ve come through a recession and yes there may be a bit more disposable income about although the last 7 years have undoubtedly made us all a bit more value savvy!
But maybe it’s time for us to stop and think, professionally and personally, about what value really means and it certainly isn’t spelt C-H-E-A-P.