Cheap is for a reason!

We’ve all heard the story of the astronaut’s response to the reporter who asked him what was going through his mind as he sat on top on the enormous rocket, about to hurtle him into space.  He said as he looked around the cockpit that he was reminded that everything was provided by the lowest bidder….

That would probably unnerve me – the lowest price provided the device into which I have entrusted my life?  Hmmm.  That’s probably not too bad but what happens when things seem like too good of a deal.  When things are too cheap, don’t you worry?  What is missing?  What value is there in something that costs 20% less than all of the other providers?  As my son would say, ‘juuuuuunk’….  As an example: An Iridium 9555 phone generally costs $1,050 – $1,100.  So if you see one for $900 ‘on the web’, aren’t you concerned there is something missing?  Like a batter?  Or charger?  Nothing is free in this world, we all know if, but still resist and want the ‘best deal’.  Well, lowest price in usually not the best deal.

I was most pleased to read a senior officer at EADS’ Astrium division recently hammered the point that Lowest Priced Technically Acceptable substitutes (LPTA) is ‘dangerously flawed’ method of evaluating contracts.  He went on to talk about the risk with lowest priced providers – there is no accounting for past performance.  At GlobaFone, we’ve run into this issue in the past, losing bid to companies that see SatCom only as a commodity, just a box to take in and a box to ship out.  If that is your provider’s view, you really need to re-think who you are trusting to provide you with such a mission-critical solution.  When we lost a BGAN bid to a janitorial company that underbid by 15% (just under cost) we called to ask them to sell to us at that price.  The admitted they had no idea what a BGAN was, ‘We just move boxes’.  Good luck to that customer with any future support or knowledgeable insight like – Oh I don’t know…how to use the BGAN…..?  Might be important for you to have a provider that knows what they are selling.  Just sayin’

The officials’ comments mirror what I have been saying for years: buying from the lowest priced provider puts your organization at risk.  If your provider doesn’t know what they are selling, what it is, what it does, how to use it, what will happen anytime you call for help?  Lowest price is lowest value. 

So hats off to the growing notion that I in fact could be correct about my value proposition: pay a little more and get some value – work with a provider that has experience, loyal clients, knowledge and can support you when you need it.  Otherwise you are wasting your time and money and risking a whole lot more.

Thanks for reading.