• Do you listen effectively to your staff?

    22 Oct 2018 | 12:00 am

    Christ said, "If any man has ears to hear, let him hear" (Mark 7:16 NASB). We must develop the habit of effectively listening to staff. The further removed we are from manufacturing or customer service, the more effective listeners we[…]

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Aug 06
2018

$500 Dollar Brain Surgery?

Posted by: Steve Marr

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“Keith” was explaining what a good bargainer he was and how he always got the lowest price. I asked Keith if he needed brain surgery would he would take a $500 surgery bid over a $35,000 bid from a qualified specialist.  Of course Ken would take the specialist.  Then, I asked if one specialist was $35,000 and the other $33,000, would you simply take the lower bid and move on or would you check into qualifications, patient outcomes, and patient satisfaction? Of course he would decide evaluate all factors before making a decision. The key is to determine which provider has the best value rather than just the lowest price. 

 

Some time ago I was searching for a brush hog and located several possible models with several hundred dollars price variance. Each unit seemed able to do the job I needed, and I was inclined to simply click and order the cheapest unit. I took a few more minutes to read a number of reviews. The cheapest unit seemed to operate okay under some circumstances but had difficulties with rougher terrain according to reviewers.  Since I had rough terrain, I spent about $300 more for a better unit because I believed it would hold up better.  For me, the more expensive unit provided better value than the one with a lower price.

When we present our products and services to customers, we need to stress value as well as price. At times I work with clients who set their product or service at a higher price tag. I ask them to justify why a customer should pay more to use them rather than somebody else. At times the client was not able to clearly differentiate why the higher cost was good value. Sometimes I believe they did provide better value. However, without being able to articulate value; sales are easily lost.

When we establish price for our product or service it is also important to understand the competition.  What do they charge? What are their competitive advantages? What exactly do they offer their customers? We need to understand these factors in order to highlight our own competitive advantage clearly and decisively to prospects. Then we can establish the value of what we offer rather than just price.

A water delivery service generally responds within 3 to 4 hours of the service request, even in the evening or on weekends. A competitor charges about $50 less; however, they often don't pick up the phone at night and deliver on a reliable schedule. If you don't need water for a few days, buying by price is not a bad idea. However, if your water tank is dry; you better call the service that provides timely service. Or if I needed water delivered to my home because my well wasn't working properly, I would pay more for reliable service. It's hard to take a shower or wash your dishes with no water.

Over the years I've learned to mostly ignore customers who only buy on price. I am less interested in being the cheapest supplier in town. In my experience there's always someone who will dig post holes a little cheaper or cut your grass for a bit less money. John Ruskin wrote once, “There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man's lawful prey.”

When I am the buyer, I understand looking for value rather than price alone. However, when I'm on the selling side; I work diligently to make sure that my prospective customer understands the value of my offer rather than looking at price alone.

Micah wrote, “Shall I acquit someone with dishonest scales, with a bag of false weights?” (Micah 6:11, NIV). During the time of Micah, dishonest merchants would carry different weights with them and use them to cheat customers. Today this practice surfaces in different ways when businesses make a significant number of promises which they fail to deliver to customers. As buyers we need to weed out these manipulative differences while as sellers we need to make these differences clear to prospective buyers. We need to ensure customers understand our value.

In other words, a $500 brain surgery may save you money, but will it save your life?

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