In any industry you will always find someone who will provide the services you are looking for at a cheaper price, but is it always wise to buy cheap? How can you be sure of value for money and a return on your investment?
For SMEs it is particularly important to recognise the immediate and long-term differences between cost and value during any procurement process.
SMEs often outsource services to remain cost efficient and operationally effective. However, if a service or product is not providing the value or ROI that a business expected, then time and money is wasted on rectifying the problems.
That sports car on the forecourt
The automobile industry is a good example to demonstrate value (often measured in quality of products, brand reputation, customer service, customer experience and customer loyalty) in conjunction with actual costs (i.e. full sale cost of the car, cost to maintain the car, its roadworthiness and its depreciation over time).
Let’s focus on the sports car sector in our example. You, as the buyer, might prefer to use your regular garage to sell you that lovely sports car that has been attracting your attention on the forecourt for some time. You may get a good deal given the ongoing relationship that you have with your trusted garage owner. Perhaps the price is set at an affordable figure, which you are happy to pay. If you are emotionally attached to the car at this stage, will you buy on impulse without any further research or comparison viewing?
Perhaps you decide to take your time and view a few other garages to see if you can get a better deal. You manage to find the same car for 15% cheaper than the original car you found. Is this a good sign? Why is it cheaper? Do you ask these important questions to gain a better understanding, or do you simply buy cheaper because you feel you have found a good deal?
You can always find cheaper cars in just the same way you can always find a cheaper provider for business services- this is a fact – but it’s how you wish to operate and how you wish to be effective and sustainable in business that really matters.
What’s the value?
Critical assessment and evaluation is a significant process during service or product procurement, and a clear understanding of what you gain for your money spent is important. This can be applied to both personal and business situations.
If your product or service provider cannot provide a clear statement of actual value then the price is irrelevant; you simply don’t need to consider a product or service that won’t provide value.
Some companies can legitimately provide products and services through a “high value low cost” pricing strategy if they declare their operational costs are low or they deliberately work on smaller margins.
Many companies can demonstrate their value to their customers through customer testimonials or product demonstrations.
The ownership of identifying meaningful value is on the “buyer” to ask specific questions in regard to cost, value and ROI.
It is important to ask the questions “why” and “how” as many times as you like until you are satisfied the product or service meets your or your business’ objectives. It’s your money after all; spend it wisely and the returns will follow.
We’re dedicated to providing value for money for all our clients. We are often undercut by cheaper providers through tender processes, but we know our worth! This is evident from our long list of happy clients and repeatable work that comes our way. If you’re interested in our services, we’d love to hear from you!