I spoke with a customer last week that had a fairly demanding label application problem to solve. We trialed several different materials and came up with a few that worked. After he told us which ones worked, we provided pricing. He replied, “The products that work are outside of the price point for this project.” That statement still perplexes me, over a week later. I’ve had several George Constanza moments, thinking of the perfect comeback well after the conversation ended. Some comments I wish I had thought of during our conversation:
“Would you guarantee you’ll pay me your target price after I send you a product that doesn’t work?”
“How about you just send us money and we send you nothing?”
“So you’d be OK with a product that doesn’t work as long as it’s at the target price point? Got it.”
Given the nature of the application, the price difference for labels that work versus the other products was minuscule in the grand scheme of the product. The labels make up a very small fraction of the overall packaging cost and even less if the entire product cost is considered in the analysis. Someone had established a target price point based on other label applications this particular company had. In their analysis, they neglected to factor in the additional requirements they demanded for the labels. These requirements, which they designed, were only met by higher performing (read: more expensive) products. Those of us that sell “stickers” for a living crack up when people complain about prices. Many labels cost fractions of pennies. Even in this application, the price of the label was less than 3 cents! The retail price of the product is hundreds of dollars per unit. Factoring out the retailers’ gross profit and distribution costs, my guess is the high-performance label represented less than 0.03% of their total cost. Not 3%, three thousands of one percent!
I am certainly biased, but when I think about the performance demands required of labels, it’s a pretty good value proposition for the customer. Obviously, we’ve got some work to do to promote that value proposition. Remember, labels make the total package! If they don’t work, that package (product) is worth a lot less than you think.