Price Vs. Cost

How often have you based your decisions on the price of a product or service rather than the cost?  You may ask…“what’s the difference?” And believe it or not, there is a difference. The late great Zig Ziglar talked about this in one of his famous motivational speeches to a group of fellow salesmen. He asked his prospect…“Mr. Brown are you basing your decision on the price of the product or the cost?” I’m sure you can guess what the prospect asked -“Well, what is the difference?” Zig goes into giving an example of when he went to buy his 6-year-old son a new bicycle.

They first went to the Schwinn bike store where they priced out a bike for $64.95 (a lot of money in those days for a bike). Then he went down to the discount store and priced a bike at $34.95. Now, you can clearly see the difference in price right away. So, they ended up buying the cheaper bike from the discount store. But 60 days later they had to go back to the discount store because he needed new handlebars – which was ok because it was still under warranty. Then 30 days later they had to replace them again and they were no longer under warranty. So it cost him $4.50 – so now the bike costs $39.45. Well, three months later the sprockets and brakes went out and they had to replace those parts and they went back to the store and paid $15.00. Now, he’s got $54.45 (plus gas and time) invested in that bicycle. A month after that, the bearings in the front wheel went “kazzip” (says Zig) and the discount store told him it would be about $5 to replace it. At that point Zig said, “I threw in the towel and said no way.”

So what did Zig do? He went back to the Schwinn store, bought the original bike they looked at for $64.95 and his son rode that bike for the next 10 years.  All they had to do was periodically raise the handlebars and replace the tires once. So what…right?

Well, let’s break it down. For 6 months the discounted bike cost them $54.95 or $9.00 per month for him to ride that bicycle. On the other hand, after 10 years the $64.95 Schwinn cost him $6.50 a year!

Now I get it. Do you? Price vs Cost.

I’ll go ahead and say it – I’m definitely an emotional buyer. Heck, most of us are. But sometimes we have to think about the cost of something over the price tag. We’ve been conditioned to believe what we see, and doubt what we hear. So look at the over all investment – see it and hear it.   Whether it’s reinvesting in a new website for your company or producing a branded video, I wouldn’t recommend ever going with a company based solely on price. Remember there’s a reason why some things cost more or why a business may charge a certain rate for their services. Look at their product/service and then their success rate. Look at their reviews and testimonials from those who have used the services.  It’s important, and in the end could save you time (which is so valuable), and of course, money.

 

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