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A Business Owner's Dilemma: Why Price Doesn't Always Equal Value

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Last year, we thought we’d lost a potential client.

They’d come to us looking for a new IT services provider. We spent time going over features, pricing plans and options for their business. We talked about how great IT stabilizes a business, but also gives it room to grow.

We knew this potential client was talking to a few different services providers and weighing costs.

In the end, they chose the other IT services provider

The other guys seemed like a cheaper option. We understood how this could happen, because we’ve all got budgets to work with and it’s tempting to pick the option that costs the least. We swallowed our pride and moved on. We focused on serving our current clients, searching for new ones and refining our processes.

A few months later, something unexpected happened: the client came back.

The competition: junior staff and creeping costs

They had a lot of complaints about the other guys. Their staff was made up of mostly junior people who couldn’t work independently and always needed input from their supervisors. They’d call tech support and have to talk to three or four people before getting an answer. This wasted a lot of time and racked up billable hours.

The other guys didn’t support Apple hardware, meaning anyone who brought an iPhone or MacBook Air into work was out of luck if they ran into trouble or a password was lost. The client soon realized the fees they were quoted were just a starting point. Each additional feature cost extra and the monthly bill starting adding up.

Our competitor was not, in fact, the cheaper option. The client was paying more than they expected to, but not getting much value from the IT services.

On top of it all, the client’s IT system went down frequently, booting them off the server and locking them out of their email accounts. When this happened, the client had to put in a lot of work tracking down their IT services provider.

Service and value

Our prices seemed higher upfront, but this client actually saved 15 to 20% per month because they didn’t have to chase us down to reset their networks, and their computers are faster and more reliable.

If you’re working with a services provider of any sort who sounds a lot like this competitor, we’ve got four suggestions for you:

1. Price doesn’t always equal value.

Even if you’re paying what seems like a lot for those services, if your provider isn’t finding ways for you to save money in your business or making your life easier, you aren’t getting value from the relationship.

2. It’s OK to change your mind.

If something isn’t working, it’s OK to change gears. It’s better to figure it out now than wait until your list of problems and annoyances grows.

3. Do a gut check, in addition to looking at the numbers.

Trust is not something you can fake. Go with the person you have faith in, even if the cost seems a bit higher.

4. When you outgrow a cheap solution, don’t replace it with another cheap solution.

There will come a point in your business when you need a solid team who can support the size of your business and its growth.

Got more questions?

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Topics: Business Continuity, To consider