In a world where everyone wants everything for free and prices are continually being slashed, why would you even consider or want to pay more?
I’ve owned a small business and worked for a couple of SMEs in my time so I can really appreciate the need to save pounds wherever you can. And as my grandmother says:
Look after the pennies and the pounds will look after themselves.
But in a modern day of “pile’em high and sell’em cheap”, does this really stack up?
When working as a consultant, I worked with a number of companies that required IT services. Each of them provided a brief and expressed a desire to spend the smallest amount possible.
One client was an e-tailor who, despite turning over £100k pcm online, wanted to spend less than $5 per month on their (US) website hosting. While this did indeed sound like an amazing bargain, I asked them what would happen if something went wrong? My recommended solution was robust and reliable, but came in at almost 80 times the price.
You can imagine the response I got. Needless to say, the company continued to experience high profit margins from its online presence. (wait for it)
About 8 months later, the US hosting company upgraded their servers which meant the code and systems used on this particular website were no longer compatible. At the same time, the hosting provider’s migration to the new configuration went wrong, and so the website went offline. I called them up to find a solution as my client was now loosing a significant amount of money every hour.
The response was something like this:
I’m terribly sorry, sir, but our servers needed to be upgraded and there is nothing we can do. We can refund you your $5.
So, an outage that’s costing the company nearly £400 per hour is offered a compensation of $5. That’s roughly £3…
Another company I worked with also had a hosting issue with an equally cheap £2.99 pcm deal through one of the Big 5 hosting companies. Yet again an issue arose and we needed something sorted immediately. One automated support ticket later, we were told there were a lot of issues that day and we’d have to wait our turn.
Judging by the response, I felt that we were not necessarily important to the hosting provider and were merely a number. To be honest, we probably were.
If I was paying £500 pcm and not £2.99 – do you think I would get a different response?
When was the last time you heard someone shouting about bad service in Waitrose?
I know we are all trying to save money in every way we can, but my experience tells me that paying a little bit more for business crucial things can save you a lot of hassle later on.