If you’ve been in business long enough, you’ve heard the complaint. “That price is higher than what I expected” or “I really want to work with you, but the firm down the street is a lot less expensive.”
I’ve been in business more than 16 years and I’d be less than honest if I told you no one ever complained of paying too much. Even though like you, I believe our services and expertise are well worth our fees, occasionally I doubt myself. A sign of tough economic times, I had one of those moments last week. After sending a hefty invoice for a drop-everything project, I called my client ready to explain charges that she hadn’t even questioned. Imagine my surprise when she retorted: “I actually expected the bill to be much higher.”
While research suggests that customers often have skewed perceptions of what you make off of them, perceptions can be understandable. When gas prices spike causing economic pain for millions, few buy the whole supply-and-demand argument but instead blame big oil companies they say have been gouging customers for years. When you order a bottle of wine at a restaurant, it typically costs three or more times as much as it would at the liquor store. Then there’s bottled water. The website Twilight Earth says that’s marked up 4,000 percent. The list goes on.
But what about companies who unabashedly take advantage of their customers without any sense of wrongdoing? After being without power for several days when Hurricane Sandy hit, my husband and I stopped at a local convenience store to buy ice in hopes of preserving our defrosting freezer. The typical 10-pound bag was being sold at nearly double the price. When we complained, the clerk shrugged and said if you don’t want it, someone else will. It’s nothing new. Often natural disasters prompt inflated prices from people trying to make an extra buck. Let’s face facts. People need what others are selling and in times of urgency they’ll pay whatever it costs.That doesn’t make it right.
There are several questions business people should ask. First, what price are you willing to pay to dupe your customers? If they find out and leave you, is it worth it? If they stay because they still want your services, will your relationship be compromised? Perhaps it boils down to your moral compass. Are you someone who would file a phony insurance claim rationalizing that your high premium payments justify doing so at the expense of others? Or are you the person that would be outraged and report such a crook?
Several years ago when my mother-in-law died, she left a small amount of money to her grandchildren. Many months later, my sister-in-law called to tell us that because her kids were significantly older than ours, they had actually received more financial gifts over the years than ours. She didn’t think it was fair and wanted to even it out. I was surprised. Not because I ever doubted her, but because we would have never known. She didn’t have to tell us, but her moral compass pointed her toward the common good which is a lifelong relationship far more important to her than a few extra dollars.
Contrast that with an unfortunate event in my own family years back. My grandmother also left a small amount of money to her grandchildren. We didn’t learn about it until years later because a relative kept the information from us. Her moral compass pointed her elsewhere, eroding trust and creating a lifelong separation.
While many families experience rifts, the business lesson is about perceptions. In today’s age of social media, all it takes is one customer to tell another who tells another and your brand is tarnished forever. Your parents probably told you “honesty is always the best policy.” Perhaps you tell your own kids the same thing. That doesn’t mean you’re a bad person if you exaggerate or tell an occasional fib. But your actions communicate your values to your customers. Warren Buffet once said, “Trust is like the air we breathe. When it’s present, nobody really notices. But when it’s absent, everybody notices.”
Is the extra buck really worth the future hurdles you may have to navigate? Only your personal moral compass can tell you which direction to travel.