Pricing and bargains — Figuring out the “great deal”

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four seasons paris
A suite at the Four Seasons Hotel in Paris

One of the favourite conversations in family and social groups relates to how we achieve exceptional bargains, especially related to travel. Last night, for example, my brother-in-law shared how he and his wife managed to snag two free nights at the Four Seasons Hotel on the ChampsÉlysées in Paris (regular room rate about 800 Euros a night) — and they added to the pleasure by reporting that she was there for her birthday (which seemed to last for a month, as the “it’s her birthday” claim applied to other events and destinations.)

Meanwhile, I repeated some of my Air Canada Aeroplan stories and the techniques in virtually always flying business class or (even better, first class), on points.

These conversations rarely dwell on bad experiences — except when we use them to obtain the free goodies. (The air conditioning didn’t work quite right during a previous visit to another Four Seasons hotel — the complaint led to the free nights in Paris, and so on.)

The question: Why do we dwell on these points, and what can we do about the bargain-finding bragging when we are on the selling, not purchasing, side.

I think the issue here relates to price/service/value disparities, and the extreme imbalance in these aspects, especially within high-end or luxury consumer purchases. For example, realistically, it doesn’t cost any airline 10 times as much to serve a first class passenger as someone travelling on the cheapest economy fare. Sure, there are additional costs, in catering, fuel (fewer passengers per weight/space) and perhaps specialized staff training, as well as other perks — and of course marketing/advertising. But are the costs 10 times as much?

Of course not. The difference/gap can be explained by pricing dynamics. There are two types of people paying top dollar for luxury travel. The first situation occurs when someone else buys the ticket, either an employer, or client. The ticket purchase reward is disassociated from the actual user — so the traveller doesn’t care about the cost and person at the purchasing organization isn’t actually spending his own personal funds. The second:  Well, there are some people with so much money that they don’t care.

The mere mortals, such as my family and friends, who play these travel games, have enough experience/clout and resources that we can certainly take trips and sometimes have others pay for them. But we aren’t going to throw our own money at these overpriced options. So we poke holes in the system gaps, and find the savings.

Lets take things back to business, and our own marketing and pricing strategies. Certainly, many people try the cost saving strategies outlined here for construction and renovation projects, both personal and in a business-to-business format. Yet, few of us brag about our successes in saving money. The bargain-finding experience usually turns out sour, it seems. The good deals aren’t so good. The low-ball acceptance turns into a constant battle, or wildly expensive change orders, or (worse) a bankrupt contractor unable to complete the job.

Negotiated price deals, or situations where both purchaser and vendor realize that they need to pay and be paid fairly, seem to work out much better. Collaborative structures/systems, where there are mutual agreements on value engineering and other cost savings initiatives (that lower costs but don’t sacrifice quality or margin) almost always work better than adversarial structures. And there are great success stories out there.

Alas, I fear that the bragging that occurs within our personal space — the stories of the savings and deals we achieve by manipulating the system, colour our perspectives and relationships within the construction marketing space. And that is too bad. Because, it seems, the best bargains in our industry seem to occur when we stop trying to win these super deals and incredible cost savings.

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