Best price does not mean best value

In the past 20 years, we have all been taught to worship at the temple of price transparency. This is not a bad thing. A large proportion of us remember the days of obscure contract wording and the difficulty of finding comparative offers.

Now everything has changed. Comparison engines have proliferated on the web and attract massive traffic from consumers and business people trained to look for rock-bottom price. One of our largest supermarkets has consistently refused to invest in a loyalty scheme, saying that it pushes that investment into lower prices. Price transparency is good because it means we have a better chance of spotting if we are being ripped off. But what if our interest in price transparency has morphed into price obsession?

Price obsession is destructive, in that the desperate search for a bargain undermines the worth of any added-value service that we may get from a higher-priced supplier. Taking the example of the supermarket: what is the point in obsessing about low prices if you haven’t bothered to invest in a loyalty scheme that would help you get feedback from customers about the products they really want? What about the computer you buy at a bargain price, but when something goes wrong you can’t get through to the helpdesk? And in contrast, how delighted are you by the mortgage company that will roll your various debts into a single secured loan package, and are flexible enough to run the arrangement over exactly the number of years that suits your future plans, rather than a fixed term?

Let us go back to the bargain-priced computer. In recent years, the computer industry has become highly commoditised and price driven, but the downsides to this can outweigh the benefits. For instance, research was recently conducted that looked at the correlation between PCs more than three years old, their declining reliability and the productivity of employees. The research found that, across Europe’s top three economies, one third of all PC equipment in the workplace is more than three years old, adding unnecessary costs for business and the public sector in higher equipment failure rates, rising maintenance costs and lost productivity. There is consensus among IT managers that PCs and laptops should be replaced every three years because this matches new-generation technology cycles, and because ageing PCs and laptops also incur escalating maintenance and support costs.

VARs have to grapple with the need to educate customers on the mutual benefits of all-in, tech-refresh packages, made possible by financing tools such as leasing. Complete bundled packages – hardware, software, support and maintenance – are more frequently being offered, allowing the customer to take advantage of the benefits of leasing, such as fixed payments and the inherent flexibility of the leasing arrangements, while catering for upgrade and add-on requirements as needs change over time.

Here the VAR moves from product shifter to service provider. The customer is then not only ensured the most up-to-date equipment without a large, up front cost, but they also have the security of ongoing advice and support from their service provider.

In addition, the VAR enjoys regular contact with the customer and the periodic upgrades help to secure continuous revenue.

Are we then entering a golden age where price obsession falls away and the true value of service is appreciated? Not quite. But things are starting to move that way.