Sometimes, you know you didn’t pay enough

… (and sometimes you probably suspect you paid too much)

A common trait in western cultures is the eye for a good deal – you know, getting two-for-the-price-of-one, or thinking that it’s worth buying something because it’s on sale and you’ll save 25%, rather than because you really need it or wanted it beforehand.

I saw a quotation the other day which set me thinking… John Ruskin, a leading 19th-century English artist, all-round intellectual and writer on culture & politics, said:

“There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. 

It is unwise to pay too much, but it is also unwise to pay too little. 

When you pay too much, you lose a little money, that is all. When you pay too little, you sometimes lose everything because the thing you bought is incapable of doing the thing you bought it to do. 

The common law of business balance prohibits paying a little and getting a lot… It can’t be done.

If you deal with the lowest bidder it is well to add something for the risk you run. 

And if you do that you will have enough to pay for something better.” — John Ruskin (1819-1900)

This is something that maybe executives at Mattel toys are mulling over right now, but it’s probably a valuable lesson to any consumers about the risk of going for the absolute cheapest in every sense, regardless of price point.

There’s probably an economic principle to explain all this, but I’ve no idea what it’s called

As it happens, I’ve been getting back into cycling recently and that’s required me to spend a great deal of time and money poring over bikes & accessories, whilst learning about all the differences between manufacturers, model ranges etc.

In short, they’re all much of a muchness. Just like computers, consumer electronics, or cars – is last year’s model really so inferior to the all-shiny new one, that it’s worth paying the premium for the up-to-date one? And how can a single manufacturer make such a huge range of related product and still retain its aspired brand values? (quality, excellence, durability, performance, blah blah blah)

I’ve pretty much come to the conclusion that for any individual at any point in time, there is a point where whatever it is you’re looking at is just too cheap, too low-spec for your needs. Sure, I can buy a A graph for illlustrative effectmountain bike for £50 in supermarkets or junk shops, but it’ll be heavy and not as well screwed together as a more expensive one I might get from a good cycle shop.

There’s a similar principle in all sorts of consumer areas – like wine, as another example. It’s possible to buy wine at £3 a bottle, but it’s going to be pretty ropey. £5 and up and you start getting really noticeable improvements – maybe a £6 bottle of wine could be considered 5 times better than a £3 bottle, though it’s unlikely that this will carry on – at some point, you’ll pay double and the more expensive product will hardly be any better to most people, but for someone, that might be the mid-point in their curve which would stretch from too cheap at one end, too expensive at the other, with a nice middle flat bit where they really want to be.

The far end of that curve would be the point where buying something too expensive will be wasted – if I only need the mountain bike to go to the shops on a Sunday morning for the newspapers, I could do without a lot of the lightweight materials or fancy suspension that a better bike would have. Ditto, if I’m an average cyclist, I won’t need a top-of-the-range carbon bike since it won’t make any difference to my “performance” (though try saying that to all the golfers who regularly sink their salaries into buying all the latest kit, without having any meaningful impact on their game).

Maybe it won’t be “wasted”, but I just won’t have any way of judging compared to other products in its proximity – if I’m in the market for a MINI and yet looked at the comparative price difference of a Ferrari and an Aston Martin, I wouldn’t rationally be able to say that one is better and worth the premium over the other.

So what does any of this have to do with software?

A two-fold principle I suppose: on one hand, maybe you don’t need to buy the latest and greatest piece of software without knowing what it will do for you and why. Or if you do buy the new version, have you really invested any effort into making sure you’re using it to its maximum potential?

Look at the new version of Microsoft Office, with the much-discussed “Ribbon” UI (actually, this link is a great training resource – it can show you the look of the Office 2003 application, you click on an icon or menu item, and it will take you to the location of the same command in the new UI).

The Ribbon scares some people when they see it, as they just think “all my users will need to be re-trained”, and they maybe ask “how can I make it look like the old version?”.

The fact that the Ribbon is so different gives us an excellent opportunity to think about what the users are doing in the first instance – rather than taking old practices and simply transplanting them into the new application, maybe it’s time to look in more depth about what the new application can do, and see if the old ways are still appropriate?

A second point would be to be careful about buying software which is too cheap – if someone can give it away for free, or it’s radically less expensive than the rest of the software in that category, are you sure it’s robust enough, that it will have a good level of backup support (and not just now, but in a few years’ time?) What else is the supplier going to get out of you, if they’re subsidising that low-cost software?

Coming back to Ruskin: it’s quite ironic that doing a quick search for that quote online reveals lots of businesses who’ve chosen it as a motto on their web site. Given that Ruskin was an opponent of capitalism (in fact he gave away all the money he inherited upon his father’s death), I wonder how he would feel about the practice of many companies using his words as an explanation of why they aren’t cheaper than their competitors?

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