Why Cheap Can Be Scary

While pitching our value proposition recently, a CFO I spoke with exclaimed “how and why are you so cheap?”

I was taken aback, because frankly, I never thought of us as cheapos. But the fear and doubt in his voice was a familiar tone. It should be, since I myself used it yesterday when I received an email regarding a 7-day cruise for $199.

Nonetheless, Mr. CFO led me to think about why, in such an economy wherein frivolity is out of style, cheap is still one of the scariest things out there.

If “smart buy” were synonymous to “cheapest”, then it would simplify things for everyone. Since this is not the case, let’s put a tube of toothpaste through my value decision matrix to find the comedy in how scary the purchasing decision can be.

For $4, you get a brand-name tube that seems to have everything…cool packaging, tartar-control, whitening agents, and an on-call massage therapist (which I could really use). For $1.99, you get a generic paste that also claims to have all the goodies – even the packaging looks cool so it must be ok. But then for $2.50, you can get a brand-name that’s on sale yet is slightly smaller in size than the other two (therapist not included). Impressively, I’m able to calculate (or read the supermarket pricing label) how many cents per ounce I’m paying so I can look at cost on a level playing field. But now I’m stuck with questions about taste, cleaning power, squeezing ease and whether or not other toothpaste users in the house will agree with my decision.

The fact is, no matter what, I need the toothpaste. So why not just buy the cheapest one? Why doesn’t everyone? Because the fear of cheap sinks in. If I really need something, then I’d rather pay a little more lest I suffer the consequences. In this case, bad breath, ugly teeth and unpleasant visits to my dentist.

Fortunately, there are products out there that are truly a great buy and at times, are also the most affordable. Like locally-grown organic fruit at my farmer’s market. Or my VOIP that has eliminated my international phone bill. Or the super soft towels I bought at a major department store chain that is closing. Or Accolo (yes, here comes the plug) which is the #1 On-Demand RPO solution and is such good value (cheap, to Mr. CFO) that it can put 6% or more of a VC’s investments back into a company’s core business.

So let’s not be too scared of cheap. It takes some thought, research, trial and error and sometimes even personal sacrifice (last year’s ugly haircut comes to mind) to find true value, but once you do, it’s worth it.

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