How to Lower Standards
Those 'smart' people, who are so incredibly short sighted that they can not see anything beyond the price, contribute heavily to the lower of standards in every way they can. In fact, they contribute to lowering the grade of both services and products because they do not wish to, or are unable to tell the difference when it comes to content, structure, methodology and most important of all value creation and return on investment.
I am not speaking here of fair market competition where it is about offering better services at lower prices with comparable quality and grade due to innovation or breakthrough technology or ideas. What I am talking about is comparing 'apple to watermelon' and bargaining on price as if there really is an 'apple to apple' comparison.
How do the 'apple to melon' people do it? Well it is easy; they have a number of things in common:
1. Their egos are somehow connected to their ability to bargain and haggle over prices.
2. They believe they have scored a victory when they get a lower price.
3. They do not understand the connection between lower prices and lower quality and grade.
4. They mistakenly assume that they have actually won something when in fact all they have done is contributed to the lower of commitment to quality and interest in maintaining high standards. *
5. Ignorance of consequences or worse, individuation to the impact on quality, standards and outcome.
Here is a recent example from my own experience. I select this example not because it unique, but because it is so typical of the general mentality of those who believe that pressuring suppliers to lower prices is 'smart' and actually helps them.
A certain client decides that the expert in Training Trainers is someone who has a rare limited exposure to the field of education, psychology, curriculum and instructional design and professional training. The experience that they refer to as 'expertise' amounts to a Train the Trainer workshop at a hotel chain and experience as an internal trainer at the same hotel chain. Other qualifications the competitive supplier has a university degree and some exposure as an independent trainer at other companies.
Now they are comparing the qualifications above to those of an expert trainer with qualifications that look like this:
1. A personal investment of USD 25, 000 per year with world-restructured trainers and coaches in order to keep on the cutting edge of developments in the field of learning, training and development.
2. 40 years of practical experience in the field of education, learning, development and management.
3. Academic qualifications at the doctoral level in both the performing arts and change management.
4. Professional qualifications in Hypnotherapy (100 hours), Training Trainers (500 hours), Strategic Intervention (150 hours) and many others too numerous to list here. These are supported by 5 to 20 years of practical application and refinement.
5. Designing, developing and authoring numerous training programs and workshops.
6. The most important achievement however, is the positive impact of that trainer on thousands of lives through the workshops delivered over the years and the testimonials both oral and written attesting to the benefits received.
So when the discussion is about price instead of Return on Training Investment (ROTI) here are the losses:
1. The cost of training includes the time of the participants as well as the opportunity loss incurred when people are away from their jobs
2. The limited learning and exposure they will receive from a less qualified and experienced trainer.
3. The poor transfer of skills to the job due to insufficient skill training during the workshop.
4. The design of the workshop in terms of the specific knowledge and skill sets included and sequencing of the content in such a way that the program leads to sufficient competency for the trainee to apply the skills with confidence after the training.
5. The take away materials such as references, aide memoirs in the form of templates, reference materials and online resources that can be used after the workshop.
6. The actual training methodology that is applied during the workshop itself – that serves as important modeling opportunity for best practices in training
7. Finally the capacity of the trainer him / herself to serve as a role model because of their expertise and the humanity
All of the above is lost when we focus mainly on price. Here are some interesting analogies:
Organically produced food is less costly to your health in the long run. Although the initial cost is higher because it is not mass produced, it has more nutrients and is free of harmful chemicals from fertilizers and pesticides.
Flying 'First Class is less costly in the long run because you are fit to function when you arrive at your destination and you save time with fast check in and departure from airports
A 5-Star restaurant is more expensive than a fast-food outlet but the quality, taste and nutritional value of the food is superior and its contribution to obesity is far less.
Going to a qualified doctor is less costly in the long run because you are more certain that you will not damage your health by taking poor advice or in appropriate medication from unqualified but well meaning 'friends' and acquaintances.
There will always be someone who can make the product or service a little worse and a little cheaper. So where do you draw the line?
It is neither reasonable nor logical to take two things that may belong to the same category of products or services – for example cars or training services and expect to say because one is lower priced, the other, regardless of grade or standard, should be the same. No two services or products are exactly the same – they will differ in content, materials, grade and method of delivery!
We all know that real diamonds and rhinestones are not comparable and no one in their right mind would argue that because the rhinestones look like diamonds, the diamonds should there before be sold to them at the same price as the rhinestones. So why does that logic escape some apparently 'smart' business people ???
In light of the 'diamond analogy', one could conclude that it reasonable to consider and compare price to the exclusion of all other elements.
So why would services provided by people with different levels of expertise and capabilities be any different from products?
(If all they care about is price why should anyone worry about offering high standards? enough quality to keep the business running.)
I would really like to hear what experiences others have had regarding 'price discussions' and bargaining games. Visit our website and share your experiences.