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True Value
Something that recently caught my eye in philately (stamp collecting) made me think about how we value the goods and services we buy.
Ebay has a very active stamp collecting community, with anything up to 200,000 items for sale at any one time. The key item that determines whether you get a bargain or not is the catalogue value (or ‘cat’). The trouble is, there are several publishers of stamp catalogues: Stanley Gibbons (UK), Scott (US), Yvert (Europe) to name a few. Each of these have their own value that they’ve calculated for a particular stamp or set of stamps, and they very often are not in line. For example, SG tend to put a higher price on British Commonwealth issues than say Scott, to whom the commonwealth is just another bunch of countries.
So whats my point? I saw a UK-based seller offering a set of Jersey stamps which he claimed had a catalogue value of £35, with a very attractive price. They were in perfect condition, but the very best cat I could find was £22…which made his asking price suddenly seem a little over the odds. Which catalogue did he get that price from??? Better still was another seller offering the same set, but in not quite as good condition - according to him it had a cat of £40!
What’s it worth to you?
The fact is, there is no ‘official’ guide that can be considered to give the de facto value. I could create my own catalogue of stamps and set the value at £50. Who is to say my catalogue price is wrong? Now, buy my stamps at half catalogue price and get a bargain….
So whats the link with IT? Well, in much the same way, people try to gauge the value of the services they receive and compare prices against competitors prices. If they feel they’ve paid more than competitor A would have charged, then they feel cheated. If they paid less than competitor B would have charged, they got a bargain. But the truth is, even for the same service (let’s say a website) a true comparison is impossible.
Let’s imagine two competing web design agencies. They both get asked to quote on a job, and lets imagine that they both were asked to do the job.
Agency A was the cheapest. Agency B wanted 50% more!
Agency B delivered on time, but Agency A delivered late, as some better paying work came in, so that got done first.
Agency A provided one trial design, but would only accept minor modifications to this without asking for extra fees.
Agency B provided three designs, but were asked to come back with a final design based on what the client liked / disliked from the three.
Agency A did the work but never seemed to understand the clients business or their customers. Agency B got to know the clients business and even suggested items that should be in the website to help drive new business to the customer.
Six months later, the client wanted to update a few items. Agency A were happy to assist, but at an agreed rate. Agency B saw there were only a few minor text-based changes and a picture, reckoned there was only 10 mins work involved and did the updates for free.
I think we’d all agree which was the better agency to deal with, but would you have picked them at the outset based solely on their quoted price? Maybe if there was a relationship already in place, say from a networking group or from personal recommendation, some of you may have chosen agancy B. Others may disagree and say ‘cash is king’ etc. and basically plumb for the lowest price every time. Maybe the true value of something is what we believe it to be worth. Therefore, if cheap is the most important thing don’t expect excellent service - you didnt buy that. If excellent service is the most important, don’t expect cheap.
As one of my old bosses explained to me, there’s something known as the ‘Heinz Tomato Ketchup’ principle. At the supermarket, we could just as easily buy the cheaper supermarket own-brand tomato ketchup. It’s still made from tomatos, vinegar, sugar, etc. All the same ingredients, and for a lot less per bottle too. So why does nearly everybody buy Heinz????
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