Jim's Marketing Blog

Marketing ideas to help you grow your business

Cheap can be expensive

I was talking to a friend recently, about his Apple MacBook. It looks really scruffy. The lid has scuff marks all over it. It’s old and he admits that it hasn’t been very well looked after.

I asked him why he was still using it. He replied, ‘I use it because it has worked perfectly for almost 6 years’. He was right. It still does everything he needs it to and the screen is easier on the eye than some of today’s notebooks.

apples and oranges

Comparing apples and oranges

When he bought that MacBook, he could have bought 2 or 3 cheap laptops for the same price. However, they would not have offered him the same ‘fit and finish’ or quality. To suggest that the cost of his machine was three times as high as those cheaper alternatives, would be to confuse the price with the cost. It would be like comparing apples with oranges.

The price was 300% higher, but all these years later, the cost wasn’t.

For instance:

  • You have to factor in the value of owning the same laptop for almost 6 years and enjoying a 100% hassle free experience.
  • You have to factor in the value of using high quality components for almost 6 years, like a great keyboard and screen – rather than the kind of keyboards and screens that ship with cheap laptops.
  • You have to factor in the time saved, and frustration avoided, by not having to configure each of the new machines and transfer data between them.

Of course, this isn’t a Mac / PC thing. I am a PC user myself and buying a similarly priced top end PC notebook, could have led to just as sound an investment.

The point here, is to look beyond the base price of any business investment.

What this means to you

As a business owner, you need to explain the value of what you provide, compared to YOUR cheaper competitors. Prospective clients and customers will happily pay more, so long as the value is clear to them.

Do you have any examples or experiences of great value for money, which seemed expensive at the time? Share your thoughts with a comment.

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  1. Hey, Jim… Another great post about the important distinction between cost, price, and value.

    I did an animation project a couple years ago for a client of mine, creating three cartoon characters for him to use in his advertising. He’s a small local business, and I charged what might be considered a pretty high fee for my services for a business that size.

    However, the value came in the contract that went with the characters, which gave him outright ownership of the IP (not something I ordinarily do for my clients), for use however he sees fit in the future. Since the project was completed, he’s used the characters on TV, in print, the web, on apparel, signage, etc. They’ve become the central theme of his marketing, and I’m sure he’ll get a lot more mileage out of the campaign in the years to come. Not bad for a one-time buyout fee.

    • That’s a great example, Brett.

      The client clearly saw the overall value, rather than simply the number on the invoice.

      Thanks for sharing, sir.

  2. Zamancele Mavuso

    March 29, 2013 at 16:23

    great article about the difference between price and cost.

  3. Mr. Jim,

    I had this conversation with my brother.

    Our parents saved money on buying a cheap camera and 20 years after their passing, all we have are blurry pictures.

  4. I tried to save a ton of money buying my last automobile without paying for an expert to examine it first. It was in primo condition and had just one previous owner.

    Within 6 months I had paid out over $2000 on it. Looked great to me. Looked like a moneypit to an expert.



  5. Hello Jim,

    I admit this is a great article.

    Once I had the times when my clients asked me why my company gave a higher price for development than some other competitors.

    In which I answered that “I give you something that others don’t.”

    I mentioned a quote I forgot whose, stating that “I may not give you what you want, but I give you what you need.”

    • Hi H. Thanks for the kind words. People will certainly pay more for a product or service, so long as they believe the value exceeds the price.

  6. Yes I have experienced this more than once in my lifetime. Cheaper is not always better.

Comments are closed.