“Price is what you pay. Value is what you get”
A favourite quote of mine from one of the world’s great investors, Warren Buffett, a wise elder who I’ve constantly learned from for well over two decades.
Today I’d like you to consider two things. One is the price you pay and the value you get as a customer. However, the second may take some deeper thought. What is the price you charge and the value you provide to your customers?
In the last few days I’ve had two experiences.
One was a poor experience with a car rental that has me thinking about my own choices as a customer around the price I pay and the value I get.
The other is that I’ve been contacted to support someone at a critical point in selling their business. When looking at what to charge them for that support, am reminded of a parable.
Learnings from a poor car rental experience.
So, last week I was on holiday to somewhere with limited car rental options. The cost of the major car rental company right where we arrived into the city was really high as it was Easter weekend.
I therefore booked a smaller agency that I’d never used before. When we eventually lugged our suitcases and found their office (directions were very poor, so even in a city I know well we took ages to find it), turned out they did not take American Express credit cards. Yes, am aware this does happen with other vendors, but have never seen it with car rental companies. Though I had several debit cards with me, I did not have a credit card other than Amex and they wouldn’t take debit cards either.
Though I had my Visa credit card details with me, they would not accept them without the physical card being present. Instead, they charged me more than teh cost of the four day car rentla for additional insurance to take the deductible down to zero.
Was not a happy customer as my car rental cost was now more than double. They then took me to the car and pointed out that the tank was nearly empty and their policy was “empty to empty”. Again had never ever seen this, felt like a scam to end up with fuel in the tank from each new customer. I did show them on my reservation that their own terms and conditions stated “full to full”, but to no avail.
Who was I irritated with? Mostly myself. I paid a certain price and got a certain value, and valuing the customer rather than squeezing extra money out of them is not something that Greenmotion (this was the company name) did for me.
“Price is what you pay. Value is what you get”
The old man and the hammer
So, to the second recent story.
I was recently contacted by a business owner overseas around selling their business. Whilst I may fly to see them, it may be that I simply review some documents, exchange some emails and spend a little time on the phone with them.
What will I charge them for this support?
For sure, it won’t be based on the time I spend at an hourly rate.
Modesty aside, I am uniquely placed to support them, there is truly nobody else with the particular skillsets and experience I can bring to them and give them concise and direct support at a critical time for them and their business.
This reminds me of a parable:
The following is an incident about an engine failure in a giant ship. The ship’s owners tried one expert after another, but none of them could figure but how to fix the engine. Then they brought in an old man who had been fixing ships since he was a youngster. He carried a large bag of tools with him, and when he arrived, he immediately went to work. He inspected the engine very carefully, top to bottom.
Two of the ship’s owners were there, watching this man, hoping he would know what to do. After looking things over, the old man reached into his bag and pulled out a small hammer. He gently tapped something. Instantly, the engine lurched into life He carefully put his hammer away. The engine was fixed! A week later, the owners received a bill from the old man for ten thousand dollars.
“What?!” the owners exclaimed. “He hardly did anything!”
So they wrote the old man a note saying, “Please send us an itemized bill.”
The man sent a bill that read:
Tapping with a hammer $ 2.00
Knowing where to tap $ 9998.00
Effort is important, but knowing where to make an effort makes all the difference.
When I support this business owner it may only take a little time to do this, yet there is over three decades of learning and experience that will be brought to bear to know which tool to use and where to tap.
Many service providers are still in the business of charging for their time. If your time is to deliver knowledge and expertise from deep learning and experience in yourself or your organisation, I do recommend consider shifting to a fresh paradigm of charging fo the value you provide.
“Price is what you pay. Value is what you get”