Discounted products and services are no longer seasonal occurrences. Standard to luxury items are slashing their prices in order to compete with the online shopping trend, both here and overseas. However, there is a difference between a discounted product and a cheap product. A discounted product, although “cheap” in price, still retains its quality and value. A cheap product is something that never had the attributes of quality and value, to begin with. It is a product that is at the end of the pricing scale because the quality of its materials and the process of production, is exactly that, cheap.
Understandably everyone wants to save money, especially in these times, however, we need to be aware of falling victim to a false economy. False economy is an expression that refers to an action that saves money at the beginning, but over a longer period of time, results in more money being wasted than being saved.
Many business strategies make some form of cost-cutting and money-saving a priority. Cost-cutting is one of the main actions that must be executed in order to make a successful business and in return make a profit. However, the downfall is the mindset that the absolute “cheapest” is your only option.
This is when you fall into the false economy trap, and companies set themselves up for either failure or disaster. Falling into the false economy affects businesses and consumers on many levels. The quality of decision-making is the factor here, and the cause and effect of our decisions are what needs to be considered.
For example, many SME businesses may be tempted by cheaper equipment. On the surface, these cheaper offerings could appear to be great deals. However, a cheap phone or communications system could mean unreliable phone or poor internet connection, poor equipment performance, and loss of communication resulting in frustrated or lost customers, poor reputation, and poor staff retention. The so-called ‘cheaper’ service just costs you a whole lot more than you intended to pay.
It is not just the salesperson who has an active role between the seller and buyer relationship. It is also the job of the buyer to do the math and to look at the genuine return on investment (ROI) on their purchase. A professional salesperson is well equipped to look at the consequences and ROI of each purchase and will help you make a sound decision based on facts.
However, if you are unlucky enough to not have a professional salesperson to help you through this process, here are some points to consider that will allow for a clearer picture and understanding of the gains versus losses of your purchasing decision:
Will the cheaper option cost you in time? Whether it be travel time, time spent on repairs, or time spent being without your purchase because of a fault, this can ultimately deliver a net loss.
Although the purchase may save you money in the short term, it „s just as easy to spend triple the original amount due to cheap products and their knack for faults and regular servicing needs.
The frustration in dealing with a product or service that doesn’t work, and the stress and pressure you place upon yourself in order to get it working are all factors that will cost you in other areas of your business and professional life.
While it is important to reduce costs, it doesn’t mean that the only other alternative is ‘cheap’. Before any purchase, there needs to be an analysis beyond the obvious price on offer. Just because something is cheap does not mean it is good for you or your business.
Sue Barrett is an experienced business speaker and adviser, facilitator, sales coach, training provider, entrepreneur, and founder of Barrett Consulting.