This is the first in a series of posts on Frugal advice. I haven’t had a lot of excess money to invest lately, so I figured I could share some strategies for a frugal lifestyle. I hope you find my insights helpful.
For those who aren’t in the marketing industry, I just want to take a moment to share a trend that marketers are using as an excuse to overcharge you. This can apply to anything from plumbing services to retail video games.
The key phrase to watch out for is when someone starts talking about “the value they provide.” I used to work for a company as a developer for less than $15 per hour who resold my skills to clients for $175 per hour. These clients would often end up spending hundreds of dollars to have minor text changes and image changes on their websites. The company charged this much because of “the value provided” by these services.
The source of this phrase is from one of the world’s most renowned consultants, Alan Weiss, and his book “Value Based Fees” (Affiliate Amazon Link). The thesis of the book is to charge fees based on the value that you perceive your clients/customers will attribute to your goods/service as opposed to your cost times a multiplier, or a fee that is competitive in the industry.
If a good or service is actually unique and superior, this pricing and marketing method is justified. However, 90% of the time in a competitive market, the quality to price ratio (what most people would call value) of the goods/service is on par with the rest of their industry. When someone starts talking about “the value” they provide, they’re usually trying to convince you that the quality of the goods or service is higher than reality to justify the price. Additionally, if they’re literally using the word “value,” it’s because they can’t think of anything that actually makes them stand out to provide that boost of quality. At this point, you’re paying more so that you can fund their marketing team and sales people, and not for anything you will actually receive.
If you understand the goods/service you’re seeking, and your initial reaction is that something is over-priced, you’re not wrong. Find another provider, and get a competitive quote. A service provider who is passionate about providing excellent service, and is willing to do what is necessary to make you a happy customer, doesn’t need to tell you about “the value” they provide. It will be obvious.
If you’re being sold to, you’re also going to be charged for that sales process.