When identical products are available from several sources they are “commodities”. For some commonly used items in industrial controls, it sometimes seems like discounting is a way of life. And the lowest bidder wins. Or loses?

Differentiate your product

Quality is a tough-sell – everyone says they have it. The savvy customer will review whether or not prospective suppliers operate an ISO 9000 program, or have a good track record from past shipments. A demonstrable reputation for good quality is indeed a differentiator and that value should be reflected in pricing.

Delivery implies availability within a specified time to satisfy the customer’s need. Commodities tend to be offered "from stock"; but suppliers should recognize that there is a carrying-cost involved, which must be factored into the price.

Cheaper is not better

And what about coffee? It’s available in most restaurants as a “bottomless cup” – free refills. And yet, Starbucks has continued to grow from strength to strength, with coffee that costs as much as five times as anywhere else. What’s the catch? Well, it’s offering all the things that go with a good cup of coffee – comfortable sofas to lounge around with friends, newspapers and plenty of good magazines to read if you wish, muffins or donuts to go with the coffee, and all the little niceties that make a difference.

Sell value

One would think that pride would involve offering the highest value at a reasonable cost. It is curious that some people boast about their products being the lowest cost. When buying components, do they buy the cheapest? When hiring people, do they hire the lowest paid? If they do, then good customers might choose not do business with them.

I’m sure you’ve heard the story of the engineering consultant who was called to repair a machine that had stopped the factory and tightened a single screw within about 5 minutes to re-start the whole place. When the bill was received for $ 2,000 the customer was outraged: "You spent just 5 minutes here, and we have received a bill for $ 2,000!"

The consultant smiled, "The tightening of the screw was free. $ 2,000 was for knowing which screw to tighten!"

Always remember – you are selling value: your knowledge, your experience in the business, your understanding of the problems that are involved, your ability to solve the problems that will inevitably come up, your availability to help the customer when needed. Indeed, you may help to specify the FABS that differentiate your product, to justify a higher price based on value. If you helped your customers to develop their requirements to meet their specific needs, it is unlikely that you’ll lose out based only on price.

When you have quoted your best price, if the customer says that it is expensive, don’t make excuses. Your immediate response should be, “Yes, but it is the best! And you get my involvement when you buy my product.” And if you lose, ask yourself whether you should really be doing business with that person, or that company.

As an instrumentation professional, always strive to provide the most value – the best specifications, the best performance, the best quality and reliability, the best delivery, the best applications assistance, the best after-sales support, the best product literature, the most helpful documentation. And, do that at a price that is the best value for the Customer – and for yourself!

The next time someone demands a discount, don’t discount yourself! And never be the lowest bidder!