Jul 31, 2014 by Curt Finch In Finance 5160 Shares|
We’re all familiar with the phrase “you get what you pay for.” It’s such a common statement that it’s difficult to pinpoint the exact origin. It’s likely that, as a business owner, you’ve used this exact phrase when discussing the value your business provides to potential clients or to your colleagues.
But how often do we think about this phrase when it comes to our dealings with other businesses?
Of course, when it comes down to it, it’s all about that bottom line. But it’s also important not to let thinking about our bottom line render us short-sighted. That concern for our bottom line is what can make someone “cheap-out” when it comes to other businesses and service providers – even though they’d never want to receive that same treatment themselves.
The Cheaper Way is Not Always The Best Way
An example that comes to mind is the popularity of outsourcing, popularized by sites like Elance, oDesk, Guru and Fiverr. These sites let people post a listing for services they need provided (everything from basic data entry to writing and editing to coding an app) and receive bids from providers around the world.
Because of the global nature of these marketplaces, they’re often referred to as a “race to the bottom” by service providers – there’s always someone willing to do what you can do, except for less money. And to a business owner, that lower cost can look like a great deal.
Despite appearances, it’s not always necessarily the best route, even if it costs less up front. You’re still going to pay a “time fee”. Discussing a project with someone whose English skills aren’t as good as yours can make it difficult to move things along in a timely manner. Back-and-forth emailing can get muddled once a language barrier is thrown into the mix. It’s likely that by the time communications have been resolved and the project is done, you’ve paid at least 2-3x what you would have if you’d gone with a more expensive but more experienced service provider.
And that cost doesn’t factor in the time that you’ve spent making sure the project runs smoothly – which can add up to several hours. As an example, if you bill your time at more than $5/hr, that adds up to a considerable expense. Often times, many business owners have come to the end of a frustrating project and wished they’d gone with the higher-priced service or business.
The phrase “you get what you pay for” works more than one way. By putting your hard-earned dollars towards something, you’re supporting it and creating the demand for more of it. So, if you use your business’s profits to outsource instead of keeping it local, you’re setting up the demand for more of that same sort of work – which can have long-lasting side effects on a larger economic scale.
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