Price Is All That Matters.  Until It Isn’t!

One of our sale people got a call from a customer.  The customer was in a panic and wanted us to match a price on a product we stock.  Our sales person inquired as to why.  The customer responded, “My current supplier (our competitor) can’t ship on time.  I need an order to go out today but I can’t pay more than what they charged me.”  While the honesty was great, the logic was a little lacking.

We all want the best deal.  Too often, we revert to price as the most (or only) factor in the transaction.  An old business axiom says, “You name the price; I’ll set the terms.”  As so often happens, we have a competitor selling on price.  Our customer made the mistake of assuming said competitor would have the item available when it was needed.  Upon further digging, we were told our competitor regularly doesn’t have items available.  Stock outs happen.  Manufacturing issues happen.  But if someone is routinely out of products they supposedly stock, I think that’s their way of setting the terms of the deal.  The low price doesn’t really mean a lot if you can’t get the product.

Customers are very good at throwing out low-ball prices during negotiations.  They never reveal the other costs associated that are often associated with a low price.  The hassles of dealing with stock outs add a significant (although hard to calculate) cost to dealing with the low price.  “Ceteris paribus (all other things equal)”,  as economists like to say, a low price is great.  Quite often, that low price comes with strings attached.  As the Romans said, “Caveat emptor (let the buyer beware)!”

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