Buying and Selling on Price

The lowest price is not always the best deal. I suggest it is rarely a good deal for buyers or sellers.

A Good Deal?
When all things are equal, buying on price is a good decision. The problem I have with price shopping is determining if the playing field is level. Are all things equal? Is the lowest price item an apple for apple comparable product to the higher priced product? I guess if you are buying a brand named product in a box with a model number the low price wins. In that case, I have concern about the vendor who makes the least money on the sale. Will they be around to stand behind my purchase?

If I am selling on price, particularly if I am the lowest price, I am probably not making enough money to justify making the sale. I might be able to get away with it once in a while, but in the long run, consistently being the lowest bidder is a threat to my company and my livelihood.

My Experiences
I have had to deal with pricing pressures over my career.

Start with the premise that a sale or purchase is made up by a blend of three factors, price, quality and service. If one of the factors moves, it causes the others to change. If I can’t get my price, how can I maintain top quality and responsive services? They cost money. This is just reality. If I give low prices and lousy service the customer will quit. Likewise if the quality is low, the low price doesn’t matter to the customer.

When I was much younger and dumber, I sold prepared culture media to local hospitals. These biological agar dishes were fragile, sterile and had a shelf life of a few weeks. If a shipment were broken, contaminated or out of date, I actually reminded the complaining Microbiologists that they got a great price (the consolation). In other words, they got what they paid for. Needless to say, I quickly stopped using that line.

When I sold computer systems to doctors, many would howl about the price. I held my ground, noting that someone had a Mercedes Benz (insert your favorite luxury car name) in the parking lot. “I think it’s you!” The message was clear. “If you want quality you have to pay for it and you obviously appreciate quality.”

Recently, when I sold computer consulting and programming services, I ran into the same objection. My hourly fee was $150 per hour. They would object.
“My last consultant only charged $85 per hour.”
“Where is he and why am I here?”
The answer was simple; the discount consultant took more hours to work on projects and didn’t deliver satisfactory results. $85 per hour was a bad deal for the customer.

Value is the Key
Real selling and buying is a blend of value. The seller needs to make money to provide value and the buyer is almost always disappointed at some level after the discounted sale. The best transactions are always based on a fair exchange of value.