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How Sticker Shock Can Hurt Innovation
We’ve all had the experience of “sticker shock” — when you see the price of something you were interested in and, suddenly, you’re not so interested.
However, while this is usually a good thing for your personal budget, that’s not always the case for your business.
Fiscal conservation is important but think about it on a quality vs. quantity model. If you were shopping, say, for a new vacuum and you bought the one with the lowest price tag, it might break after three months of use. Whereas if you had bought the mid-priced or higher-value vacuum, it would likely last you for longer and do a better job to boot.
Of course, we’re talking about businesses, not vacuums here, but can you see the parallels? Choosing something just because it’s cheap – or not buying something that could last a long time and really help you because it’s a little more than you had planned to spend – isn’t always the wisest decision. In many cases, you can end up spending more in the long run this way.
Now let’s look at it from a business standpoint.
Here’s a common scenario we see – a business has grown to a mid-size level with little marketing. They’ve achieved a solid customer base, but they understandably want to grow more.
So, they reach out to vendors about different marketing options – and then get sticker shock.
The feeling that something is expensive can cause you to pull back and not consider a tactic that could lead to huge revenue in the long term.
This is where being too tight on the spending reins can actually stifle innovation. If you’re always looking for the cheapest option, you’re likely to end up with the cheapest result.
We’re not advocating for spending more than necessary. We understand the flip side that higher-priced does not always equal higher-value. So how can you tell the difference between what is worth the money and what is really out of your budget?
The best approach is to investigate what things actually cost and then move forward to look for estimates. You might do this by:
- Estimating what the service would cost if you were to do it in-house.
- Gather a few different quotes for the same services. The same services are key here – if you get one quote from Company 1 for X, get a quote from Company 2 for X and Y, and a quote from Company 3 for X, Y, and Z, it will be very hard to compare – even if they’re offering to throw them in as an incentive.
- Ask for case studies and examples of past work.
- Look at the potential for revenue. Don’t be afraid to ask the quoting company for a time estimate or how long it will take to see results. You don’t want to be unrealistic here – a few months often isn’t enough time to see real metrics – but you want to make sure you’re putting your money into activities that can actually drive the results you want.
Also, remember there are different levels for everything:
- Off-shore outsourcing – this is the cheapest option but is a big risk when it comes to quality and approach.
- On-shore outsourcing – this is often more expensive but brings better quality and results.
Sticker shock can also lead companies to try cheap solutions – like a throw-it-at-the-wall approach.
They might hire unpaid interns to manage their social media or ask the teenage daughter of a manager to make them some video content for $100. They might ask the administrative assistant to add website management to their other duties without a pay raise.
This can seem like a savvy money-saving move at the time, but you’re selling yourself short. As we recently wrote about, a true marketing strategy is more than just social media and if you want real results, a skilled resource (meaning paid and experienced) is absolutely vital.
If budget conservation is a concern for practical reasons (you truly don’t have the funds or business is down) there are ways to save without sacrificing quality.
Part of that includes your vendor approach, which will determine the level of service that you get and the budget that you spend.
If you express that you are looking for a full strategy/vision you will get it — and likely spend more. Alternatively, if you express that you want a quote for Google pay-per-click only, you will get that and likely spend less.
You can and should be strategic with your marketing and budgeting, but cheapness isn’t a strategy that will get you very far. When you take the cheapest approach, in the end, you spend more and get nowhere.
At The Purpose Company, we can help figure out your marketing budget and recommend the best approach to working with a vendor. We have experience working with budgets of all sizes and experience driving real results.
Contact us by calling 647-880-9709 or visit www.thepurposecompany.ca.