What the going rate for mending a toilet flush? What would you expect to pay someone to make and fit a solid wooden outside gate? An impossible question to answer without further information – the spec for the job – even for a trained plumber and carpenter.
I know that the price for a product or service is about supply and demand, and it may vary even from the same provider. You’d expect to pay more for an ice cream on the beach in the middle of summer than in a city centre in the middle of winter; and similarly with cinema seats. Then there’s the cost of the materials, the time it takes to do the job, and the quality of the work (I wonder – do more skilled workers take more or less time to do a job?)
Before we go out to get an estimate for a job – from someone like a plumber, a carpenter, or an electrician – we’re unlikely to have even a ballpark figure at the start of the process. We need to do some research – find out if anyone has had a similar job done locally, get a number of actual quotes and compare them.
In an emergency you have less scope to ‘shop around’ and the providers know this – a burst pipe needs fixing quick and you’re prepared to pay almost anything to stop further damage. I understand why the hourly rate of a service provider can look high (apart from you paying for their expertise) – it has to cover the down time, and all the business costs – including time spent on travel and the administration when they’re not out actually earning money.
I was talking about my plumbing problem (no, not that kind of plumbing) with a friend who thought that insurance companies were to blame; that plumbers (he was talking about one that came in to fix his boiler…) will declare something beyond repair because they know an insurance company (and, ultimately, premium payers like you and me) will pick up the bill, however inflated.
Back to the plumber who had come round about a non-urgent job – my toilet flush. I had little idea about the price for the job but I think he assumed I’d say ‘go ahead’ whatever the cost. I didn’t – I said I’d consult my other half about it when I heard the cost – twice the price of the plumber I eventually used. He went off in a bit of a huff making me feel guilty for not giving him the job (maybe that was the idea?) I also felt bad when a gate supplier sent me a short text message saying ‘you get what you pay for’ after I told him I’d gone with a quote that was 40% lower than his. I suspect I’m being too sensitive; that one-man (and yes, they tend to be men) providers of domestic services see the to-ing and fro-ing around prices as a normal part of running a small business.
But what about the multinational providers? I was advising someone recently about the art (it’s not a science) of pricing products and services; about how the cost of his time and his expertise might fit into the equation I’ve outlined above. We got on to talking about the ridiculous price of printer ink (often more than the cost of the printer itself, and many times more expensive than the finest champagne). I learnt from him that the brand leaders have invested heavily in making their printer ink of such a viscosity that other inks clog up the printer jets if you use so-called ‘remanufactured’ cartridges. Once again big companies are locking us into making them money by cutting out alternatives – so much for competition!
Meanwhile, my bathroom toilet is now flushing fine. I’m still waiting for the wooden gate…
A related blog post: https://enterpriseessentials.wordpress.com/2016/01/05/value-cost-and-price/