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The Cost/Value Conundrum: Some Things Cost More Because They're Worth It.

Nothing ruins a good price, it's long been said, like poor service. Yet great service at a great price is often considered nothing more than good luck -- you must have stumbled upon the rare employee who didn't get the memo about ensuring mediocrity. Pity.

There's something baked into great companies that identifies their day-to-day behavior with their long term reputation. It's a central component of their brand...and what that brand represents to customers and, just as importantly, employees, investors, and partners. Good tends to breed better, and better is always more desirable, whether experiencing it as a customer or delivering it as an employee.

Yet employees who perform really well, whether in providing great service or designing the ways to provide that service, deserve to be rewarded. Add the cost of the systems and the premium paid to the staff, and both tend to be reflected in the price. "Better" costs more, and no one seems to disagree with that concept.

Sometimes, however, optimized internal performance can actually lead to lower costs. So it's possible to provide a better product backed up by exemplary service and do it at a lower price... in some utopian world. In this world, however, the perception of better allows for higher prices and, if the company can lower its costs in the process, that's great for its profitability.

cmo-cost-valueThe irony is that customers who are presumably cost-conscious will make a choice based on price instead of value, choosing a lower-cost provider because their primary focus is on short-term expenditures—not long-term ROI. They may save money today, but they'll pay for fixes tomorrow and, in the end, wind up paying more.

First class and business class travel comes with perks that are reflected in the price. Luxury cars come with "extras" that help justify the cost. Highly paid ball players deliver better performance that leads to more victories, ticket sales, and higher broadcast fees and, thus, warrants their salaries. It's rare for teams to do what Oakland did and find great players at bargain prices and wind up as world champions.

My company has failed to win clients who felt the price was too high, but it has held onto others—for years—who recognized value in our ability to create campaigns that consistently increase inquiries, sales, and revenue.
 
So the next time you're ready to consider only the price without evaluating why it might by so low, you may be getting what you pay for...and not what you need.

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About the author

Peter Altschuler's picture

BlueSteps Executive Guest Writer

Peter Altschuler has been making products and services irresistible for more than a generation in a career that extends from high technology to television production.

He’s currently the chief marketing and creative strategist at Wordsworth & Company and has served as a Group Creative Director at San Francisco ad agency Anderson & Lembke, run the in-house agency at Candle Corp (now part of IBM) and, earlier, worked in television, producing for ABC News, Sesame Workshop, The Food Network, and PBS.
   
In his spare time, he brings books to life — most recently narrating Getting Religion by former Newsweek religion editor Kenneth Woodward and Creativity, Inc. by Pixar founder Ed Catmull — and performs in everything from Shakespeare to commercials.

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