When you need to make a purchase for your business, do you try to get the best deal on whatever you need or do you automatically choose the least expensive option and hope for the best?
Wanting to save money is understandable and it’s wise to be frugal. However, if you always choose the cheapest option, it can be detrimental to your business. Short-term, you’ll save money. In the long run, it could end up costing you more.
Cheap prices often reflect poor quality
You’ve probably heard the phrase, “You get what you pay for.” This is a simple, yet true statement. With some exceptions, higher price tags usually reflect a higher quality product or service. People who opt for the cheapest option usually end up with a purchase that doesn’t meet their needs, is frustrating to use, or just plain doesn’t work.
With that said, you can’t automatically assume that the more expensive option is going to be better. Sometimes prices are inflated arbitrarily. The key is to base your purchase decisions on whether or not the product or service will meet your needs.
If several different options will work, choose the one most in line with your budget. However, if what you need costs more than your budget, don’t settle for something less. Instead, increase your budget (if possible) or find a way to get the extra funds.
Buying cheap may result in additional spending
At first, when you buy something at a low price, it can seem like you got a great deal. It won’t be too long before that perception gets shattered and you end up wishing you hadn’t gone cheap. When your low-quality products break or malfunction, you’ll have to replace them. However, it’s not likely that you’ll want to buy the same product again, so you’ll have to buy the higher-quality option. That’s why choosing the cheapest option is more costly in the end.
A great example of this situation is businesses that try to save money by purchasing a cheap power transformer. It could be anywhere from six months to two years down the line when that transformer fails and has to be replaced. There are dry-type transformers available that won’t fail prematurely. For example, ELSCO transformers have an impressive track record of zero failures since 1988. It’s because of their dedication to craftsmanship and quality insulation. It costs more, but the quality makes it worth every penny. In the long run, it’s cheaper to buy one good transformer than to have to replace a poor-quality one every few years.
How to stick to your budget and get what you need
While you don’t always want to go cheap, you also don’t need to spend every last penny buying top-tier items with every possible feature. You can get your needs met and save money at the same time.
Here are 3 tips to avoid overspending while still getting what you need.
1. Document your needs first
You can’t buy what you need unless you know what you need. Make a list of your requirements, whether the purchase is software or a physical item. When searching for possibilities, check off all the boxes on your list to narrow down your options. Then, compare plans, tiers, and models before committing to anything to make sure you’re getting everything you need and that you aren’t paying for unnecessary extras.
2. Don’t pay attention to marketing hype
Marketing tactics are designed to influence you into spending more money. Learn how to discern marketing jargon from features. Basically, ignore the hyped-up benefits and go straight to the features. When you know what a product or service does, you can decide for yourself if and how it will benefit your business.
3. Be willing to spend more money
When searching for an item or service that will meet all of your needs, be willing to spend more money to get a good fit the first time. For example, don’t buy consumer computers for your business. A little more money will get you a much better laptop. If important features are missing or you have to contact support right out of the gate, it’s only going to cause extreme frustration.
Increase your budget if needed
Regardless of what type of business you run, saving money is a top priority. However, buying the cheapest option can turn out to be more expensive down the road. Don’t be afraid to increase your budget if you find out a lower-priced item won’t meet your needs. You will get what you pay for, so make sure you buy quality products.
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