In the process of reviewing the finances in a business, I’ll look at what clients are buying to determine their break-even point. This in depth review sparks discussion on how much is being spent and the value it brings. Very often, I discover that clients have opted for the cheapest price and as a new business that’s OK. In this blog, I’m sharing the reasons why this isn’t always sustainable.
Buying a service
There are certain functions in a business that you’ll likely outsource, such as accountancy, bookkeeping, marketing and so on. While price should definitely play a part in the decision making process, simply choosing the cheapest may not benefit your business in the long run, and could even end up costing you more than you expect.
Let me share an example of this. A client of mine needed some computer maintenance and made a quick, price based buying decision. In fact, the individual wasn’t properly qualified and created an issue with the entire system, costing thousands of pounds to put right.
So think about the your needs, check testimonials or get recommendations. Compare the services provided as well as the price when making your decision. In my example, a more expensive service initially could have prevented the huge bill.
Choosing a product
The same theory applies in practice when buying a product. Printers are a fantastic example of a product that can vary hugely in price. With small desktop printers costing less than £50 to commercial printers running into thousands, how do you know which to buy?
The answer is straightforward. For product purchases, compare initial purchase cost as well as running costs and longevity. Combine the two to give a more realistic figure on how much the product will cost over time. Not forgetting to ensure it does what you need it to! With all that information to hand, you’re well placed to make your final buying decision.
In the example of a printer, in fact the cheapest printers use the most expensive inks and often a bigger investment upfront will be more cost effective in the long term, as well as providing additional capability.
In our personal lives, we come across the same scenarios. When choosing a fridge in Curry’s, the options are from the budget basic to the dear but desirable. The extra functions combined with the improved reliability will account for the bigger price tags. So in business as well as at home, the message is very much, buy what is appropriate to your needs as well as your budget.