When you go to a dealership to buy a car, you can be assured of two things. The first thing is that every car you have the option of buying has been rigorously tested and will meet all the minimum standards set by the government. The second thing is that every car will be different, with different options and different prices.
If all the cars meet the standards, then why aren’t they all the same price? Why would I pay more than the bare minimum? You probably have all sorts of answers in your head already, and those answers probably include words like “well-designed”, “reliability”, “service”, and “resale value”. Cars are something we all have experience with, and so we’ve all spent time–even if only subconsciously–making these assessments.
When I go to an Audi dealership, I don’t ask the salesman why his car costs more than a Kia. I already know the answer to the question. I can look at the two cars and see the difference in the level of care put into the design. I can drive the cars and feel the difference, too.
I don’t call the local Chevy dealer and ask “Hey, how much does a car cost?”, because I know that different cars cost different amounts, depending on the quality of their construction, the materials used, and the features included. The dealer would need to know a lot more about me and my needs before being able to suggest a model that’s right for me, and depending on whch model we settled on, the price would be different. Any dealer who would just throw a number at me without asking these questions would raise my suspicions.
When I see a dealer offering a really nice-sounding car for a lot less than the guy down the street, I don’t immediately assume that the other guy was trying to rip me off. In fact, I’m more likely to wonder how this lower-priced guy is going to get me in the end. Somehow, he’s making up that price difference somewhere. Will the car really be of high quality, like he says? Does his service measure up? Will he hit me with a lot of extras at the end of the deal?
What I’m really talking about here is value. Value is not just about the actual price of the thing being bought; it has to do with the relationship between the price paid and the thing bought. One million dollars is a lot to pay for a pack of gum (no matter how great it tastes), but it’s a deal if you’re buying a rocket (especially if it’s a good rocket).
Too often, we look at the bottom line and see a number, and that’s all. But it’s the relationship between the bottom-line number and all the stuff that came before it that matters. With a car, I’m looking for a few key things as part of the deal:
- Is this a well-designed car?
- Will it be reliable and easy to maintain?
- Does the dealer feel like someone who will take care of me, and who wants me to be happy with my purchase? Will they be there for the long haul, or is this just about a quick sale?
- Will the car’s value be sustained over time?
Of course, I have to reconcile the final cost with my real, fixed budget. At a certain point, I can’t afford to pay more, no matter how much value it adds. But I also have to have realistic expectations regarding how much I’m willing to give up to get there. The Yugo met the regulatory requirements of its day, but few people were proud to own one, or felt very good about that purchase later. So was it a good value, or just a cheap car?
Buying the bare minimum might work for some. They may not value good service, or good design, or reliability enough to pay more for it. Those whose products meet only the minimum–and no more–know what their products are worth and price accordingly in order to attract such customers. Others have higher prices, because they work to deliver something that exceeds the bare-minimum standards. Those products are going to cost more than the bare-minimum price–it just makes sense. Consumers must know for themselves what balance of qualities represent the best value to them, and spend accordingly.
Of course, I haven’t really been talking about cars here at all. But you knew that already.
