Price vs Value

[Joe E]

What's everyone's opinion on Price vs Value? is Price the be all and end all regardless of any other benefits or is it equal or does value sometimes outweigh everything.

The reason I ask is that I've experienced both ends of the spectrum recently where some one wanted to pay more than I was originally going to bill them and also another one where no matter what; they wanted it so dirt cheap that I would make a loss.

Many Thanks

Chris

 

[Techy]

For me the highest quality needs to be assured irrespective of price, otherwise you won't get repeat orders or spoke of highly (knocking out word of mouth).

This said you do need to cover the bills, so bigger clients should pay slightly less - smaller more troublesome clients should pay your premium rates.

No expert but it works for me and I feel satisfied that continually we strive to be the best at what we do.

 

[matt.chatterley]

The Price vs Value debate is one that tends to crop up all over the place.

There is a perception amongst many audiences that low price = good value - this isn't automatically true - although broadly speaking it can be applied to most goods, it doesn't really work for services.

There are so many factors which lead to the perception of the value of a service - e.g. there are loads of web developers who are cheaper than we are. But we strive to provide good value for money for our clients by helping them to achieve their goals effectively and in as cost-efficient a way as possible.

Buy cheap - buy twice!

With goods it's a little more complex. If you can buy for example a can of popular brown fizzy pop for 25p somewhere, thats going to seem like great value, because it's normally 55p or more.

However, that's just a great price - in reality - is 330ml of brown fizzy goo REALLY WORTH 25p? Thats partially a matter of opinion - but also illustrates why value is such a sticky wicket!

 

[Silent Web Solutions]

Price and Value is relative to what you provide. If you can prove to your customer that even though your prices are higher than the competition by taking on your services you provide better value for money as your customer will make more money then the higher price is worth paying.

For our Web Development services this is exactly what we do. We do not just design and develop websites that look good but we provide a potential client with a proposal that is very good value for money even though it maybe more expensive.

As Matt said above you get what you pay for and if you pay cheap prices then you get cheap services as no company can last long giving their services away. They will also not be taken seriously.

When it comes down to physical goods the price is more an issue but trust is all an issue as your customer needs to be able to trust you before they buy from you so even though your prices maybe the lowest in town why should they buy from you?

As long as people walk away feeling like they have got a good bargain the price can be anything.

 

[Phil B]

I think it is more a question of value and whether or not whatever you are purchasing is up to the job and does what you expected.

Example: last year for a very special treat I took my Girlfriend away to a very well know 5 star hotel for three nights. It was costing a small fortune but we both expected it would be worth every penny. We left on the second evening and refused to Pay – that’s another story.

No a patch on the 4 star offering from the Shires chain which is cheaper.

On the other hand when I’m away by myself it’s usually the Premier Travel Inn for me and I get exactly what I expect – a decent bed, functional room and somewhere to eat – so that is value for money.

The 5 star charged £375 per night and did not offer value for money.

The Shires charges £180 per night and does offer value for money

[FONT='Calibri','sans-serif']The Premier Inn charges £49.00 per night and also defiantly offers value for money.[/font]

 

[Will-man Rodders]

My advice ... focus on offering value. Those potential clients who chase 'lowest price' will give you hassle all the way through. What ever you supply it will never be up to their required standard - and they will complain.

I read somewhere that you should offer bronze, silver and gold services. (You can call them whatever ... ). Your normal service / product is the 'silver' level. If people want to cut back on price then offer them the bronze - you just reduce the quality - and let them know that this product/service competes with the bottom end of the market - where price is important to the purchases. The gold level is top of the range. It only costs a fraction more to produce/provide than the silver service (It has a few minor bells and whistles added) It is also the most profitable; you increase your price substantially. The vast majority of your clients will choose the silver level; they can see it offers value. Very, very few will select the bronze. And 10 - 15% will select top of the range, not because if actually offers any substantial benefit but becasue it is just that ... 'top of the range'.

 

[Silent Web Solutions]

If people want to cut back on price then offer them the bronze - you just reduce the quality.

Even though they have selected the lowest price package does reducing the quality not also reduce your high standards? Instead of reducing the quality would it not be better to just say:

"With our bronze package you are still going to receive a first class service and top quality service/product but you do not get our full package. If money and budget is an issue then you can always start with our bronze package and when you can afford it upgrade to our silver or gold package."

 

[Will-man Rodders]

Even though they have selected the lowest price package does reducing the quality not also reduce your high standards?

It shouldn't do. Sorry, I was not saying you should cut back on your customer service levels; they should remain the same. But you can cut back on the quality e.g. quality of materials used, volume of web pages offered, bespoke v template design etc.
By offering this lower service you:
- provide a service the customer wants; and
- make them realise that the competition [who may have quoted a lower price than your quoting] may be achieving that lower price by also lowering the quality.

 

[Silent Web Solutions]

It shouldn't do. Sorry, I was not saying you should cut back on your customer service levels.

I thought you meant that but it just goes to show you that by writing what you did it then reduces the perception of receiving value for money. It is all about how the message is displayed to the customer, not if it is the cheapest price.

 

[debbidoo]

As someone else said - "buy cheap, buy twice". Value is a very personal concept anyway; it really depends how much you want something, how much use you'll get out of it, how much you love it, and how long it'll last without breaking

That said, there's nothing wrong with enjoying a good bargain every now and then... (see signature)

</shameless_plug>

 

[Joe E]

Thanks everyone lots of good viewpoints there

 

[Astaroth]

highest quality needs to be assured irrespective of price, otherwise you won't get repeat orders

Personally disagree, I think the continued existance of the likes of Tesco Value proves that the quality doesnt need to be the highest to get repeat orders.

As with everything it is a case of managing expectations. If people get what they expect they will be happy (predominately) - I dont think anyone buying Tesco Value washing up liquid is expecting to get the 400 washes or what ever Fairy and the other premium brands claim from the bottle (or even the standard Tesco product does)

Value is a difficult thing to quantify because it is so personal. What adds value to me to a proposition could just add unnecessary cost to someone else. You then start considering that features should be optional but many people dont really like too much choice hence why travel insurance tends to come in Bronze/ Silver/ Gold rather than allowing you to opt in or out of each class of risk and set the cover level for each risk opted in for.

There is certainly a place for low cost and it can be a very successful business. As everyone else has said cost and value are naturally linked but it isnt a linear relationship.

 

[Techy]

Astaroth,

I hear what you say

I always try to provide the highest quality irrespective of cost, but all markets are very different as you appreciate

In a service market, not providing the highest quality (to me) is sheer lazyness / incompetence

I could up our prices by 30% tomorrow and still compete with others, but I take the view that honest graft +10% will do right in the long-term

This is paving the way for me, but not every model fits the situation as all sectors are different, as you know