Often I am asked why our cleaners cost so much and my reply is usually, “What do you mean, they cost so much?” For some reason, people think that, because one cleaner that they use and like, cost $20 per gallon, that ours should cost the same amount or less. They usually ask me to meet the price point of the product that they like or are using and want to replace. I am always shocked by this, as these statements are spoken only on the face value of a products price. With that being said, I wanted to share some conversations that I have had with customers that think that “PRICE” = “VALUE”, when it doesn’t.
Here is a general conversations that I have with many customers-
Customer- I tried your product and I really like it, as a matter of fact, it works better than what I am currently using.
Me- First off, why are you replacing your current cleaner if you like it so much?
Customer- We like our cleaner, but yours works better and we want a better cleaner, but we don’t want to pay more than we currently are.
Me- Why is that? Is that because you think our product is more expensive?
Customer- Your product is more expensive, just look at your price!
How does this even make sense to the seller? You want something better, but you don’t want to pay more? Usually, things that are better will cost more then things that are not good. For example, cars, homes, doctors, insurance, clothes, vacations, etc. Basically everything that is better will cost you more. Savings is not just reflected in the price of a product, but in the value of the product. Value can be qualified using many different rationals, including; Quality, durability, performance, appearance and even social status. For example (true story by the way): A customer buys a cleaner for $13 which is half of our our $26 retail price for our Oil Sponge HD. The customer dilutes his product 1:1 with water, for a “realized cost of $6.50 per gallon. Our product (which cost twice as much) can be diluted for the customers use at 5:1, for a realized cost of $4.33. So how is our product more expensive? It isn’t, it just appears that way.
Here’s another true story-
Customer- We tried your product and it works really good, but it costs too much?
Me- I don’t understand? How much are you paying for your current product?
Customer- $20 per gallon, but we dilute that out 5:1 with water in our walk-behind floor cleaner.
Me- When you tested our Oil Sponge UC+ product, what was the dilution ratio that you used?
Me- So, why don’t you want to buy our product?
Customer- Our purchasing manager will not pay more that $20 for a gallon of cleaner and yours is $33.50.
Seriously, this is a true story from a local Ford dealership. Again, they simply looked at the price and not the value. The realized cost for the customers product was $3.33 per gallon, ours was $.33 per gallon. Again, I am not sure how this person became the purchasing manager, when they don’t understand simple economics. An old friend of mine had a saying, “The solution is dilution”, which makes so much sense when you are using water-based cleaners. IF you can dilute the product further and achieve the same results, then you have effectively reduced the price per gallon or what is called the “realized” price.
One last story…
Purchasing agent- One of my locations can buy the same 5-gallons of Oil Sponge HD, for a lower price than you are offering… can you lower your price to match it?
Me- What do you mean the same cleaner and how much are they offering it to you?
Purchasing agent- Well, it’s not the same cleaner, it’s (product A) and it cost (X amount).
Me- Well that product cannot be diluted like our Oil Sponge HD can.
Purchasing agent- But yours cost more!
Me- Actually, The HD product costs less. Your price from us is (X-$4.00) per 5-gallons and you will need 8 pails of the “competitors product” to fill your parts washer, which is (8X)! You will only need 7 gallons of ours.
Purchasing agent- See, you need 7 pails, the other product is only… 8… wait a minute, did you say gallons or pails? But the competitors parts washer is only 15 gallons and your parts washer is 40 gallons.
Me- Gallons! You only need 7 gallons of ours (X-$4) versus (8X) of the competitors. Wait, do you even have a (brand A) parts washer?
Purchasing agent- No, but your HD product would cost more if we did!
Me- The answer is still no, ours would still cost less and you don’t have (brand A) parts washer, so why are we even having this conversation?
Sometimes you just need to be take a minute and understand if you are comparing cost or value, before making a purchasing decision about cleaners. If you have any questions, feel free to contact us to see if we can help you save money and increase your company’s efficiency. Visit www.oilsponge.com for more information.