In January, my wife and I attended a cousin’s wedding at the American Club in Kohler, WI. This is a swanky, historic hotel. It is where the PGA players stay while playing rounds of golf at Whistling Straits. Likely the nicest resort in the state. It was really a wonderful place to stay.
My trouble started when I spotted the valet. It’s not that I’m against tipping someone to park my car or that I am worried about my personal belongings be riffled through. A sense of dread forms as I realize I’m going to have to explain the delicate procedure that is operating and securing my 2002 Honda CRV to this nice valet. Worse, I might have to do that with my wife in the passenger seat.
My sweet ride was the rage of every soccer mom in the early 2000s. 200,000 miles later things have changed.
The paint is peeling off the hood like the skin of a boiled tomato. The rest of the body shows the battle scars and scratches of a Spartan warrior.
To top it off, the driver side lock no longer functions from the outside. You must unlock the passenger door and reach across the vehicle to unlatch the driver side door from the inside. These and other “character traits” make the operation of my car an intricate procedure requiring much instruction.
I’d be happy to explain this all to the valet, but if I expose my wife to this particular embarrassment, I’m going to be in trouble. Self-preservation kicks in. I make an evasive maneuver past the valet into the parking garage. Crisis averted, but the damage had been done. My wife is tired of the embarrassment risk my ride poses to her.
It was a day or two later that my wife and I had a conversation about the event. Essentially, “We are DINKS (Duel Income No Kids),” says my wife. “Why are you driving that embarrassment machine around? You deserve better and you’re being too cheap.”
Evidence I Can’t Deny
Beyond the car I also haven’t paid for a haircut since I was 16. The clipper and shop-vac paid for themselves after 3 cuts! I buy jeans every other year when Old Navy has their $20 denim sale. Finally I have three categories of dress shirts:
Funeral and Wedding – fit properly.
Casual Cool – require the sleeves to be rolled because they are too short.
Sleeve Down/No Tie – these fit well except the neck is too small to close.
The commonality between the three is the awesome price the garments were found at!
On the flip side I’m not a stereotypical cheapskate. I’ll happily fight you for the right to pay a dinner or bar bill. I have never clipped a coupon in my life, and won’t spend a dime on cheap tools. I didn’t set out to be an enigma, it’s who I am. I know what I value and what brings me joy.
You have to decide what’s important to you. In general people are happy to spend money on things that make them happy. What people value is different.
Value and Pricing
As an identified cheapskate and salesman, the value proposition of devices and services fascinates me, especially in the Industrial Automation market.
In this industry you can shop for a relatively simple device and have choices that range in cost from $100 – $10,000 for the same thing. Even if you narrow your needs to a specific class of features, the price range for comparable products is still massive – at least 10x.
It’s not hard to figure out why we get such a broad range of prices in our industry. The components are often part of multimillion-dollar systems, or are implemented on lines that churn out hundreds of thousands of dollars worth of product an hour. Downtime literally costs thousands of dollars a minute. That makes a consumer very willing to pay a premium to avoid downtime. A bolt may cost $1.50 but if it’s the one piece missing to get a line moving, its value to the consumer may be astronomically higher.
Quality and Value
When you compare devices, there are both tangible and intangible quality measurements.
Tangible Attributes: The cheapest device will use lower-cost parts, have cheaper enclosures, be rated for less challenging environments, cycle times etc.
But after you remove the lowest-cost options, you still have a gamut of options spread over a sizable range of price points.
Intangible Attributes: These are all the benefits you can argue, but not measure prior to sale, including brand name, support provided, user interface, supplier and technology community etc.
These attributes account for far more price variance than the tangible pieces. At the end of the day the bills of material on these devices are negligibly different; you are paying for the intangibles.
A Cheap Guy’s Justification for the Intangible Benefits
For devices that don’t require configuration, you can make an argument that tangible attributes should rule your buying decision. You plug these devices in and they work (until they don’t).
However, devices that require configuration are an entirely different beast.
If you have a PLC, HMI, or gateway, chances are the cost of the device is a relatively small aspect of the total integration cost. A lot of man-hours go into the configuration of a PLC or HMI. Any device that requires programming or configuration also implies a longer learning curve. Saving a few hundred dollars to a few thousand dollars on a component is not a savings if you struggle for six weeks trying to make it work with little to no available support.
What Matters is What the Customer Thinks
To some of our customers, Real Time Automation is a cheap component; to other customers we are vastly overpriced. We have never strived to be the lowest cost supplier but do strive to be highest value supplier.
If you want some living testimonial to this effect, visit:
Unedited testament to the value we bring our customers.
Does your company have the following automation systems? (Check all that apply)
Are the various automation systems at your company linked together?
What is the single biggest driver of automation improvements at your company?
Who drives automation improvement decisions at your company?
If you were given (no cost to you) a Home Automation device like a thermostat or garage opener would you allow it to be installed at your home? If no, please explain/comment.
We wanted to identify security hawks. Of the 8.5% of people that would not accept the home automation system, half declined because they already had a system or did not see the value. That left less than 5% of respondents who would not accept the system based on security concerns. This is a smaller minority than we expected.