I recently had an issue with my car.
Having driven the car over significant mileage over the last 12 months and leaving aside any comments about my driving style, I needed a new clutch mechanism.
So I went off to the nearest dealer to get it assessed and fixed. Quote £2,000…. Ouch that is nearly C$4,000
It seemed extreme and rather than just accept the price, I decided to shop around.
Final competitive quote: £800, for the exact same part that was removed.
60% lower, a saving of £1,200, all for about 3 hours of my time…. Wow, all fired up and excited by my success I decided to extend this to other purchases; Car tyres: £150 vs £120, Drain cleaning: £200 vs £100, Computer cables: £11.99 vs £1.99
The size and frequency of price differences, for the what was essentially same quality of product, certainly shocked me. It got me thinking about price sensitivity and consumer price sensitivity.
Now we all know we should shop around but, especially when time strapped, it can be a hassle getting competitive quotes, do we? Sometimes you just trust the market is competitive and transparent; reliant on other people doing the leg work and driving down the price…. ‘Surely if everyone else shops around and made decisions informed by price, I will be getting a reasonable price, the quotes will be close’… right…?
… wrong! This was not the case here and some significant savings could be made. The assumption that most consumers shop around and drive down prices is clearly flawed. The market is in fact rather opaque.
This also relates to my experience in the office, where I have seen similar dynamics at work. Items such as phones can be priced to your cost centre at £350, which you know can be purchased online for £180. You question it, but often this is the agreed price, it can be frustrating.
So there are savings to be made, cash flow improved, for both consumers and businesses. So we should be more price sensitive, but when should we be? To what degree? What is the trade off vs quality and service that helps offset the higher price?
All good questions, and to help have been using the following rules of thumb.
- Always get at least one extra quote. Even a little shopping around can save you a lot of money.
- Consider local businesses as well as the big brands. I have been finding better pricing and service from small local businesses.
- Limit the time you spend depending on the price of the item. With a rough guideline below.;
Quality and service are of course important considerations too, but all things being equal there is value to be added to your business and personally, simply by taking a few extra steps.
It is time to renew our commitment to finding value.
Let me know if you have had any similar experiences or would like to add to the equation…. am sure it can be refined!