If you’ll bear with me, let’s enter a parallel dimension for a brief moment, one where there’s no health insurance and doctors and health care facilities are in a truly open market to charge as much or as little as they want. Unfortunately, a good friend of yours discovered that they must have a heart procedure performed to repair a leaky valve, and they’re considering their choices. There’s the more expensive, world-class surgeon who has successfully completed this procedure 658 times in the last 10 years, there’s another surgeon with slightly less experience who is almost as much, and then there’s the guy who has about a quarter of the experience but is half the price. Who should they pick?
Most people know they should choose the world-class doc – if you don’t have your health, what do you have, right? But in reality, quite a few will be drawn to the half-price surgeon. Hey, he went to medical school like the other two guys, he is board-certified like the other two and he does have some experience. Plus the other two docs were less experienced at some points in their careers, and look at how well they’ve fared in their profession. Plus, he’s half the price.
This is what your customers do every day. They know (or at least have a gut feeling) you’re the better choice, they understand the differences in quality and experience, and yet they are drawn to the cheaper guys. It tempts one to lower your prices or fees to get the work, especially in a putrid economy. But don’t go there, because once you discount, you will have a difficult if not impossible time moving your prices back up, and your image as a premium, top-tier brand will take a hit as well, as price is key driver of perceived quality.
Like the half-price surgeon, there’s a reason other companies are cheaper. Say your friend chooses the half-price doc, and halfway during the procedure her heart starts to go haywire in a way that this surgeon has heard of and read about but never seen, let alone treated. This is why many people pay for the best doctors, best lawyers, best designers and writers, best accountants, best engineers, best marketers. They’ve seen it all and have a wealth of hands-on, real-world experience that is irreplaceable, and they may actually end up saving you money (and your ass) many times over because of it.
So before you discount your products or services (or before you hire that cut-rate provider), consider the consequences of going cheap.
