Low Price Is NOT ‘Value’….

If you’ve been reading my blogs for longer than 10 minutes, you know that I consistently rail against those in the SatCom sector who move boxes at the lowest price.  While some people think cheaper is a good thing, keep reading and I’ll dash your dreams on the rocks of reality as I swing at these bottom feeders again…..

Every satellite phone is made in the same factory and costs about the same price wholesale.  From there, you can decide as a provider if you want to offer low cost or high value.  Despite the claims on competitor websites, you cannot offer both lowest price and highest value as John Ruskin so eloquently pointed out decades ago:

“It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money – that’s all. But when you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

Bottom Line: You get what you pay for.

I was reminded of this aspect of the Price vs. Value debate because I’ve been reading a book in the financial industry, where I used to live before founding GlobaFone.  The following example exemplifies my point: 

You can buy high quality bonds that pay lower yields, or low quality bonds that pay higher yields.  That increased yield is the risk premium for the lower quality rating on the bond, the risk being the entity cannot make interest payments, or return the principal.  It is a pretty simple concept concluding with – You cannot buy a high quality, high yielding bond. 

The same holds true for satellite phone providers: you cannot pay the lowest price and get the highest level of service (in fact good luck getting any kind of service, support, whatever you want to call it).  So if you are willing to pay the lowest price and then add that risk premium, why not spend a little more and get what you really need; a responsible, professional provider that grounds themselves in the client support business?  Sure, a lower price may look attractive short-term, but as a prospect whose company ended up spending $10 less per phone once said to a staff member at GlobaFone, “I advised them to go with you because we’d receive kits already set up and ready to go.  Instead I have 90 phones in boxes stacked behind my desk.  Now what do I do?”

And I will leave you with that question as you have seen both sides of the Price vs. Value debate:  Now what to YOU do?

Thanks for reading!