Price -v- value

[chrisbitz]

Slight variation on topic ...
I used to know of a lovely old classic yacht which was maintained as cheaply as possible; never an expensive job when a cheap solution might do. Last heard of in a very sad and unseaworthy condition. To bring her back from her present state would now take something well into six figures.
Another, similar, yacht was cared for rather better. It cost, of course (wooden boat!), but the cost was very carefully planned for. Still sailing and still giving delight.

Sometimes, it's a case of "do it cheap or not at all". So your friends classic yacht maybe got another 10 years of use out of it by using cheap bodges, when the alternative was to scrap it because he couldn't afford to get a classic master craftsman in to repair it.

 

[Birdseye]

A question that I have often wanted to, but have, for years refrained from asking. Why is the question so often, (and not just on this forum) where can I get the cheapest product/job done? This makes me wonder what is the rationale behind this. Is it that people genuinely believe that all stuff/workmanship is broadly the same regardless of price, or are PBOers simply tightwads and price is the main motivator with quality, reliability or reputation coming a poor second. This is a genuine question and is not designed to start any kind of backlash, just that I really would like to know the answer. Is it that people think that cheap = value or historically people think that they have been poorly served at the higher end, assuming they have ever bought in that area and thus can speak from personal experience.

Its a national characteristic.It's why mass produced food is so bad in the UK. Its why the supermarket sells large numbers of very cheap water injected battery grown chiockens but when you go to France you see much more expensive grain fed chickens - and the Froggies have no more spending money than us.

Yes you dont always get what you pay for when you pay more. Compare Harley bikes with Jap bikes at 2/3 price. Ia an HR really worth twice as much as a Bav or are they creaming it.

Ate in Wetherspoons a couple of times last week and both their beer and their food was really good value by comparison with all the other pubs. The beer was £1 cheaper and the food, whilst of pub quality rather than Le Manoir, was the same quality as other pubs I've tried and was £4 for a main course. Not surprisingly the place was full and no doubt other publicans were blaming the general public's meanness.

 

[Vara]

Back to the OP, I run my boat on a fairly tight budget, so vet my expenditure very carefully.

My MO is to identify which particular product or service meets my needs and then source that at the lowest possible price.

But as always there is a balance, when replacing my Navman instruments the cheapest solution would have been NASA, but for reasons of utility I went for Tacktic, certainly not the cheapest option. When replacing the entertainment radio I went for the cheapest Aldi one as I could see/hear no benefit to more expensive models. Anchor, cheaper to regalvanise than to buy new generation kit, heater went for Mikuni as features offered by the more expensive alternatives were of no benefit to me...and so the process goes on.

Marmite I buy from Aldi at 40p less a jar than Sainsbury, same stuff exactly. To get cheaper you buy an own brand product which doesn't taste as good. It's a balance.

It sounds to me as if you are thinking of following the Waitrose model, they are trying to change their image from a Top price/high exclusive quality retailer to a more all embracing image by introducing a basic range, they take a great deal of care to differentiate this in their packaging and marketing.

Tesco did a similar thing in reverse when introducing their 'Finest' range.

 

[blackbeard]

Sometimes, it's a case of "do it cheap or not at all". So your friends classic yacht maybe got another 10 years of use out of it by using cheap bodges, when the alternative was to scrap it because he couldn't afford to get a classic master craftsman in to repair it.

Well, yes, but it's still a great pity to see a boat like that deteriorate. The term "classic" is over-used but this boat was really something special ...

A classic car with an equivalent history would have been worth millions ...

 

[JohnGC]

I guess it would be only right of me to come clean with the reason for the post, in the past I have always worked to either BS or NMEA 0400 standard and only taken agencies from what I consider quality products with good factory training and back up. I have the opportunity to take on a considerably cheaper product that is just OK (ish) iin my view and am concerned that it would harm what little reputation I have, or doesn't anybody really care as long as it's cheap.

I've heard it said that every person who has a good experience with a supplier will tell 4 people. They will tell 12 people of a bad experience.

It is unlikely to damage your reputation if you standby the product you supply or fit. The questions for you are;
1. How often will you need to?
2. Can you afford to? Cost, lost time bad rep.

Regarding Value for money.
For any minimum standard, there is a minimum price that a good or service can be provided at (assuming everyone in the supply chain is making a reasonable profit). Below that price the product supply and support is unsustainable. Above that price there are many factors that determine if the product is value for money.

Above a very basic standard, I think VFM is personal. Several people on this thread have indicated that they evaluate available products specification and cost against their own requirements. As a supplier you aid that process each time you discuss supply and installation with a customer. In my opinion (as a small business owner) customers worth having are those who welcome the dialogue, those who want a cheap bodge regardless of what advice you give should be avoided.

 

[FullCircle]

Back to the OP, I run my boat on a fairly tight budget, so vet my expenditure very carefully.

My MO is to identify which particular product or service meets my needs and then source that at the lowest possible price.

But as always there is a balance, when replacing my Navman instruments the cheapest solution would have been NASA, but for reasons of utility I went for Tacktic, certainly not the cheapest option. When replacing the entertainment radio I went for the cheapest Aldi one as I could see/hear no benefit to more expensive models. Anchor, cheaper to regalvanise than to buy new generation kit, heater went for Mikuni as features offered by the more expensive alternatives were of no benefit to me...and so the process goes on.

Marmite I buy from Aldi at 40p less a jar than Sainsbury, same stuff exactly. To get cheaper you buy an own brand product which doesn't taste as good. It's a balance.

It sounds to me as if you are thinking of following the Waitrose model, they are trying to change their image from a Top price/high exclusive quality retailer to a more all embracing image by introducing a basic range, they take a great deal of care to differentiate this in their packaging and marketing.

Tesco did a similar thing in reverse when introducing their 'Finest' range.

+1.
Vara and I are out of the same mould.

I bought my boat new in 2005, but budgetary constraints meant buying cheaper items like radar and instruments. After 9 years, I have finally managed to get the money together to have the instruments I want, to the features and specs that I want. I spent months sourcing the bits for best value. Also, I look for decent after sales service.

 

[LittleShip]

When you say continental, do you mean as in the brand, Continental

No I mean foreign as in the Continent and Asia

Tom.

 

[charles_reed]

I guess it would be only right of me to come clean with the reason for the post, in the past I have always worked to either BS or NMEA 0400 standard and only taken agencies from what I consider quality products with good factory training and back up. I have the opportunity to take on a considerably cheaper product that is just OK (ish) iin my view and am concerned that it would harm what little reputation I have, or doesn't anybody really care as long as it's cheap.

A very different question to the original you asked.
Would the replacement product result in lower charges or higher returns?

If lower charges, what is the price elasticity, of your particular "product"? Generally in FMCG 1% reduction in prices should result in <8% increase in volume (measured in units). For industrial goods/services the elasticity is much lower.

If you have more business than you can cope with a price reduction is nonsense - if you quote a lot and win a few (the mean on capital equipment is 34%), increasing your win rate by reducing prices, is of value.

Offset against a cheaper input product and thus a greater win rate, the likelihood of more costs in after-sales service and, generally, you'll be better off with sticking with a more robust product.

If you're undecided, why not try offering the cheaper and the more expensive product as alternatives - you'll be able to see how much your market values low price against better quality.

 

[David2452]

If you're undecided, why not try offering the cheaper and the more expensive product as alternatives - you'll be able to see how much your market values low price against better quality.

That was my plan if I went ahead, as an option rather than a substitute, there is no way I would replace my current range, the new product would be offered as a cheaper alternative and as I already have all the work I can reasonably manage but am looking to expand and take on staff, but that's another question entirely.

 

[Sailfree]

I think the title price v value is misleading as I think nearly everyone looks for value for money. Often there needs to be a compromise but rarely it the term cheapest used except against a set of criteria.

One aspect about price - there is a cheap price, there is a value for money price and finally there is the "marine" price cauise we are all owners of luxury yachts in some peoples perception.

 

[Trundlebug]

That is my major concern with the product, manufacturers support goes to my available customer support.

For me that's where you can effectively help to steer the customer (and offer choice) without compromising yourself.

Offer the iffy / cheaper budget product with a shorter warranty, e.g. Budget product £50 inc 3 months warranty
Mid range product, £75 standard 1 year warranty
Premium product £150, 5 year warranty.

That way, customers are able to make their own decisions and also understand exactly what they're getting (and not getting) without it compromising your reputation if the budget product needs support at 6 months old.

Without realising it I think the purchasing process is actually quite complex for many (but not all) people.
The things I subconsciously take into account, in deciding VFM are:-

• Is the function important or safety critical? (e.g. tyres, brakes, chartplotter etc)
• How often will I be using it? Every day, or just on holiday?
• In what circumstances will I be using it? (In a hurry, in the dark, under duress, when I'm half asleep, etc). Ergonomics, nice to use, user friendly, etc
• How long do I expect the product to last?
• How complex is the product - easy to fix myself if it goes wrong, or something way beyond my capabilities (e.g. a radar)?
• Am I concerned about the maker's reputation - is it important to have heard of them before, or do I need a well known brand with a good reputation?

The product in mind will have a price bracket anyway, which also adds to the complexity shown above. Low value products are low risk if they break after a couple of uses - little lost.

However, high value products (and by that I don't mean premium products - even a budget radar is IMO a high value item) inevitably create higher expectations - so the risk is higher, and the importance of quality, reputation, longevity etc is greater

All in all a complex process.
One I found most difficult when buying a chartplotter - something I might use only maybe 10 times a YEAR, buy nonetheless a high value item which needs to last, be easy to use and have good backup. Two very conflicting requirements.

Decision? Buy the smallest (therefore lowest cost) product by a premium manufacturer with good reputation.