We all love a good bargain, so when advertisements offer the allure of cheap or even free products or services, many of us find the temptation hard to resist. But as in all things in life, the bill eventually comes due, and there is always a catch. Let’s take a look at why it’s so important for each of us to carefully consider the potential hidden costs or other drawbacks of such offerings—not just as consumers, but also as small business owners and managers.
Poor Quality
The most obvious concern with a cheap product is the compromise on quality. In order to reduce costs, manufacturers and service providers will inevitably seek ways to cut corners to make sure they have some kind of profit margin. The result are products prone to defects, which wear out quickly, or even lack important features. Not only does this lead to additional waste and added expense as consumers are forced to replace these products quicker, it leads to a worse customer experience overall, which from a small-business point of view, should be a non-starter. (Neither your customers nor your employees want this frustration!)
Hidden Charges
Another way to pad a profit margin is to use additional fees, such as surcharges, subscriptions, or other mandatory purchases to access what consumers think they’re getting for cheap or free. No one likes a gotcha moment, so it’s important that any kind of promotional strategy be transparent and forthright. If your customers think you’re trying to lure them into buying something in a deceitful or dishonest way, they’ll never trust your business again. (The short-term gains of immediate sales are not worth your company’s long-term reputation!)
Limited Support
When a consumer opts to purchase a cheap product, they’re also accepting that the support they’re going to receive will be limited or non-existent—even if they don’t realize they’re making that devil’s bargain. The way this impacts your business is that if you choose to sell your customers garbage, they’re going to come back to you when it goes wrong. But whether you’ll be able to reach out to the manufacturer for help is completely another matter. More likely, you’ll have deal with the support headaches yourself, incurring the costs of repair or replacement. Or worse, punt the customer service problem away, leaving the poor customer to deal with the manufacturer alone. (That’s a quick way to never see repeat business or referrals!)
Sustainability
Cheap has a high cost in the long term. It leads to monopolistic situations, such as how big-box stores have choked out so many local retailers across the country. Cheap is also a house of cards because it is unsustainable, relying on the exploitation of low-cost labor. Eventually, through the forces of inflation, regulation, or just plain-old economics, upheaval is guaranteed. And that’s before we even begin factoring the disruption that automation and artificial intelligence are sure to bring. (Look at the economic disruption caused by the pandemic, when global shipping interruptions cut off whole industries from their low-cost suppliers!)
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The economy never stands still, and trends will inevitably change. To weather these forces, your business should plant its flag on the side of quality over quantity, on the customer experience over what’s expedient. Remember, the bill always comes due—the ones who pay it will be those who were willing to sacrifice their business’s reputations, profit margins, transparency, integrity, and long-term sustainability in the name of immediate sales. Don’t fall prey to this siren’s song, nor subject your customers to it. It’s never worth it.
Elements like brand reputation, customer experience, profit enhancement, company culture, employee satisfaction, business leadership, and more are all the bread and butter of The Brandt Group. And we’ve been helping our clients improve their businesses with these ideas for more than 30 years. Why shouldn’t yours be next?
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