You Get What You Pay For

I like a good deal when I see one, but be careful about going for the “cheap” price. Generally, you get what you pay for and many times it ends up costing you more and you either don’t realize this or realize it once it’s too late. Even commodity type services and products are not really commodities and here are a few examples:

Service providers: The pricing of service providers varies drastically, and includes virtually all services from home maintenance/contractors to professional service providers. Maybe you can find a good deal because the provider is newer in business and is under charging on purpose or is doing so out of poor business practices. However, a “cheap” service provider, especially one that you use repeatedly, will find it hard to provide quality service to you over time. This can be due to a high demand because of low prices, not being able to afford good, competent employees, and not having additional funds to invest in their business.

Products: If you are able to get the same product or software when it is on sale, then that is plain smart. However, when comparing two products, make sure that you understand why one is cheaper than the other. Reasons for a lower price can be because the product uses poor materials, is manufactured poorly, or does not contain a lot of features. The opposite can be true for a more expensive product, which is why you need to make sure that you purchase wisely.

Cost/benefit analysis: When making a purchase for your business, especially a large or important purchase, then weigh the cost/benefit. For example, a consultant may cost you $5,000, but you may expect that his advice will return $50,000 of profit. Alternatively, a software provider may cost you $10,000, but will save you $20,000 of expenses, including salaries. The examples are endless, and it is important to think of each expense as an investment in your business.

Don’t be fixated on price, but make sure that you understand what you are getting for the price you pay. A funny expression is, “If you pay peanuts, then you get monkeys!”

If you like what you just read then don’t hesitate to forward/share with your friends

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

Leave a Reply

Your email address will not be published. Required fields are marked *