The High Cost of Cheapness

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I admit it, I loved being cheap. In the past I would often ask, “Can I get it for X amount less?” My service provider would hem and haw and finally agree. Less money is better than no money for the provider, right? I save more money here so I can buy more things? And you know who won the haggle game: no one. 

There is a high cost of cheapness. This means getting far less than you would want to receive from others in terms of supply and/or labor. There is no real winner in the game of haggling

Value of time and money

Time and money are important but you also need to think about value and purpose.

My service provider would receive a diminished profit margin and as such, they needed to cut corners (in terms of labor/material). I would lose because I would not get the best service or product. So no, no more haggling for things I need for my business. 

Make sure you are spending money with a specific plan and purpose. When you need to procure a product/service answer yourself the following questions:

  1. What is the scope of the project? If this is a large or small project. Smaller projects do not necessarily need the most experienced provider. 
  2. Have I properly allocated resources for this project? If I have a fixed $50,000 budget to renovate a kitchen, but I will not spend $35,000 on a diamond encrusted backsplash. 
  3. Did I throughly research all available service providers? We all want to have Julia Roberts in our latest advertisement campaign  but is Ms. Roberts the best ROI for a $5,000 facebook ad campaign? Ask your network in addition to searching the web to see if you found someone who is a best fit for your project. 
  4. Are you prepared to be upfront about your needs? Yes, clear the air and say what you are willing to pay in advance. Do not lie to yourself or your service provider about your fund availability. 
  5. Do you really even need the service? Line up your resource needs before you make a single call. Perhaps you already have a solution that would work for your current business need. 

Did you have an experience where being too cheap cost way too much? I would love to read it! Please drop me a line in the comment section below. 

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