The customer demands all three--and probably sooner than later.
By Marty McGhie
Many years ago, I observed a sign in a small shop that read:
"Price. Speed. Quality. You may pick two of the three."
At the time I read that sign, our company was quite small,
struggling to keep our key customers happy and grow market
share at the same time. We discussed this as managers and
decided that this could be a worthwhile credo to live by. If, in fact,
we could get our clients to make a choice of two out of three, we
could certainly service them well. For example, if they want the
best price and the highest quality, they would have to live with a
longer than usual timeframe. Or, if a quick turnaround was necessary
but quality still had to
be high, they'd better get out
their checkbooks. And lastly,
if they wanted it fast at the
best price, they would have
to sacrifice quality.
Looking back, we were
na??ve. We soon discovered
that, amazingly enough, a lot
of our customers"?usually
our best ones"?wanted all
three: the highest quality,
produced within the necessary
time requirements, at the best price. And with the development
of the digital world, our wish to provide the "best two out of
three" program completely disappeared.
Today, we all understand and accept that the customer
demands all three. Indeed, if you are unable to provide your customer
with the best product, when they want, at the best price,
you will lose your client"?and probably sooner than later.
Price and the technology factor
Pricing products is one of the most difficult challenges we face.
Technology plays a huge role in your pricing decisions. You may
own brand-new equipment that produces high-quality output at
amazing speeds, which, by itself, would seem to be a great
advantage. But alas, this equipment is probably quite expensive
and your pricing structure needs to take into account paying for
the technology. Conversely, you may find yourself in a price war
with competitors owning old (read "cheap") technology, which is
perhaps less efficient but is already paid for.
It's difficult to know which circumstance would carry the
pricing advantage"?both can be effective. Regardless of which
situation you may be operating within, pricing has as much to do
with understanding the price points in your market and knowing
what each of your key customers is willing to pay.