As a marketer, price is a common topic I come across; I guess that is why it’s one of the marketing 4Ps! However, whilst it is important, in this article I want to discuss why it shouldn’t be the main driver in purchase decisions because a focus on the initial price is often misleading and ends up costing more in the long run; and as the saying goes ‘you get what you pay for.’
To begin with, I will admit that I like a bargain and I don’t wish to pay over the odds for something if it doesn’t represent good value. There are some things that I don’t think are worth paying extra for, such as perfect looking fruit and vegetables; the perfect, uniformly-shaped potatoes still taste the same as the misshaped ones, so why pay more? However, it’s when things get a little more complex and the extra price offers you increased value that you have to consider whether the extra initial investment offers additional benefits. I will illustrate with a cautionary tale from my own mistake. I have a reasonably sized (and odd shaped and different levels) lawn at home. I had a great lawnmower, but after 10+ years of hard labour, it broke. When researching a replacement, I found out there were many options and many different price points, so what did I do? I bought one at the cheaper end, of course! My lawn cutting subsequently went from under one hour to nearly two hours and my frustration levels increased substantially. Thankfully, it recently broke (after only 2.5 years) and this time I spent more on a replacement as I realised my savings of £100 had actually cost me about 100 hours of my time, immense frustration and put me back in the same position of having to buy a new lawnmower.
Initial Price vs. Lifetime Cost
As my cautionary tale illustrates, the focus on getting the best price often backfires, but as behavioural economics teaches us, we are biased to focus on that initial up-front price and forgo bigger savings over the long term for a small saving now. However, our thoughts should be on the lifetime cost of the purchase, as this can quickly alleviate the initial higher purchase price. When it comes to analytical instruments, I see three main drivers to lifetime costs:
Throughput – The higher the throughput, then the more samples you can analyse and the more you can maximise the initial instrument purchase which equate to a lower cost per sample and more samples per instrument / investment.
Ease-of-use – Potentially the biggest area for lifetime savings. If the instrument is easy to use then operation is streamlined and faster, training of new operators is minimized and establishment or transfer of new methods can be accomplished quickly – and time is money.
Reliability – Obviously if your instrument is unreliable, involving frequent periods of inactivity and repeated service interventions then this adds to increased lifetime costs and wasted time.
All of these lifetime costs can quickly add up, so if they can be minimized by a slightly higher initial purchase price then, overall, the savings will be larger. Here is an example: Let’s say you buy a HPLC instrument which costs $10,000 more. You will replace this instrument in 10 years’ time, so that’s $1,000 a year. The operator costs you $150 an hour, so if that instrument can save you just seven hours of time per year then the initial higher purchase price is justified. Just a small increase in throughput, ease-of-use and/or reliability can easily save you more than seven hours per year.
In summary, the next time you consider buying a new analytical instrument, try not to focus on the initial price, but consider the lifetime cost of that instrument and whether that higher price offers benefits in terms of ease-of-use or reliability, for example, which more than compensates that initial outlay. Remember also, that you get what you pay for and trust me, after the lawnmower incident, I know!