Cheap Isn't Always Cheap

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Some people are just born with the bargain gene. You know the kind. They clip coupons and run across town trying to get in on a sale. They never stop to consider that extra gas may cost more than the savings.

My new roommate cut off AT&T when a new offer came along. She soon learned she spent more time with customer service than she ever did previously. She switched back when a new package-deal came along.

Consumers are not the only guilty ones. Employers tend to look for the cheapest hire on the block. They are looking only at the short term bookkeeping, never considering that keeping that person and training is going to cost more than a decently qualified hire would have to begin with.
The only way to get around the "I gotcha" that is coming down the road is to understand the consequences of the decisions you make today.

Two well-known managers in different industries grasped this concept. Henry Ford, back in the day, didn't want to have to deal with Unions. He raised wages and lowered working hours. He only gave in to Unions because his wife threatened to leave him if we didn't. But bottom line, he saw the benefits of paying his workers more. He cost him less in the long run, despite having a fussy spouse.

Back in the early days of the Los Angeles Times, the unions were bound and determined to get their foot in the door. That's the main reason their wages were higher than other newspapers because the publisher didn't want the workers to feel the need.

Those industry leaders knew the value of looking at the long run consequences of their decisions. Hopefully, you can get a few ideas and change your thinking.

Bargain stores, such as the Dollar and 99 cents store are a great lure for consumers. What many don't realize as they are plucking in those dollar bargains is they are going to have to come back three and four times to get the same amount they would have paid for half in the regular store. Shop there, but know your pricing.

Be a careful shopper at so-called Christmas sales. Many times, newscasters talk about the after-Christmas sales informing the consumers that they made bad decisions after the fact. A sale is not always a sale.

Offering a cheap price for a service when starting out is fine. Keep your pricing too low for too long and you will have your customer's wondering why you are not in sync with the rest of the market. Make sure you get some extra perks. (This changes the overall price you are actually earning.) My marketing prof told the story of the gardening service that Jet Propulsion Laboratory hired.

Their price was undercut to gain that contract. He asked the chief guy why. The owner answered, "simple." "I get to use your name on my list of customers. I can't buy better publicity."

Learn not to make impulsive pricing decisions, whether buying consumers goods or pricing your services or hunting for manpower. Think of all the consequences before signing on the dotted line.

Laura Bell is Freelance Writer and owner of www.bellbusinessreport.com. The Bell Business Report offers common sense business advice and how-to info for running your business. It takes the everyday headlines apart, dealing with business news, and shows you how to put that information to work for you.

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