If an item of garage equipment costs £15,000 is that good value?
Your first response might be “no way!” It seems like a lot of money but if another item of garage equipment costs £1,500 does that then constitute good value?
“Absolutely!” you might say; “That’s a bargain-basement price compared to the other quote we got.”
The problem is that the price of those items of garage equipment doesn’t necessarily bear any relation to the value which the equipment has to you.
An item packed with features, well designed and properly manufactured might well be worth the £15,000 but a poorly manufactured component that is constantly breaking down might not be worth even £500, let alone £1,500 – especially when you factor in the time and costs of repairing it.
“Cheap” Doesn’t Mean “Good Value”
Most of us find it hard to resist a bargain. Maybe we’ve got a pre-existing relationship with a supplier, or we see something marked down to a great price. Of course, advertisers and marketers know just how to push our buttons too and just because something’s cheap doesn’t mean that it’s good value.
Perhaps it’s a shoddy product. You could pick up a cheap Chinese 2 post lift for £1100, but if it works badly and needs replacing after a short time – in the long term, you’d might have been better investing in a high quality product that will last for decades.
Perhaps it’s a perfectly good product at a very decent price, but it’s just not right for you. Sure, that lift might be amazingly cheap, but if it means that you can only fit in 2 lifts and you really need 3 to operate the garage to it’s full potential, you are not getting a very good ROI (return on investment) for the business are you…
“Expensive” Doesn’t Mean “Bad Value”
Firstly, one must be very wary of bargains, coupons and money-off deals. Marketers aren’t acting out of altruism – they’re trying to part you from your cash.
Conversely, sometimes it’s worth spending more money than you might initially feel comfortable with.
Let’s say you’re setting up a new business. Paying for management consultation might seem like a massive unnecessary overhead, but if the ROI means that for the initial investment you can recoup 50 times the investment it would seem a very shrewd move.
Try to look beyond the price of something to assess the value of a particular product, or service. Maybe that item of equipment is more expensive than others that might be available – but the service back-up and expertise to support you in ‘times of crisis’ might well be worth more than the initial ticketed price.
Value Isn’t the Same For Everyone
We often think that items and services have a particular market value, set by invisible yet powerful forces. Of course, this is the case to some extent, particularly with popular goods and on a day-to-day level, though, in your personal life, this sort of “value” isn’t really too relevant. What matters is being clear about what you consider valuable.
Perhaps the easiest example to cite is the price of a ticket to a a Premier League game. You might be willing to pay hundreds of pounds to see a local derby – but your friend, who hates football, wouldn’t pay a penny.
Any time you’re weighing up a purchasing decision (or secretly judging a friend’s choices), bear in mind that your “value” isn’t the same as everybody else’s.
The price might be high, low or somewhere in between. What matters is whether or not that particular product or service is going to be valuable to you.
To test for value, ask yourself:
- Will this help me to make more money – perhaps by saving me time or teaching me new skills?
- Will this product make my working life easier?
- In a year’s time, would I be more likely to regret buying this or regret not buying it?
Yes, it’s always going to be a subjective judgment, and sometimes you’ll get it wrong. But by recognizing that there’s a difference between the fixed price and the value that you’ll derive, you give yourself a much higher chance of getting it right.
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