Wednesday, February 8, 2012

The Downside of Low Price Attraction

My wife swore she would not revisit Japan at least within 5 years after having experienced the earthquakes and the Tsunami and the scare of the nuclear radiation risk last March in Tokyo. 

But when Airasia offered low price tickets for their debut fly to Osaka last August, my wife conveniently forgotten all her fears and booked the air tickets right away. Hence, Osaka was the destination for our family's Chinese New Year holiday vacation this year. And, we were back in Japan not even a year from her last vow.


That’s how sales and promotions having their effects on women mostly and make her (my wife) forgot the pain that came later. She didn't take any considerations (or she intentionally forgotten?) about the high living standard in Japan, about the expensive foods, accomodation, transportations, local tours, theme park, shopping; all in all, the additional high costs made the low offered airfare insignificant.

For consumer products, the pain hurts you once and you regret it after but it may have a smaller effect in a small circle of people; but for an industry product, when low price prevails without comprehensive considerations, greater suffer might need to be borne by the whole company for a long period of time.

Imagine buying a machine that is not really suitable to uplift your company’s efficiency? It could easily jeopardize the business's operation and the whole business in general.

I was involved in the business of supplying Electronic Publishing Solution to the newspaper industry before I ventured into Biometrics industry. And I’d witnessed how one of my clients, due to the cost-saving purpose, had bought a third party part to support its web printing machine. The part had caused the machine to hiccup once in a while too often to keep up with the race for the deadlines.



Save money that end up costing you more
Of course low price is not necessarily equivalent to low quality product. But hi-tech products nowadays have become too sophisticated that hardware alone would not be the only determining factor in their performance. Just as the success of iPhone, iOS and Appstore should be taking the bulk of the credit.

Yes, we packed FingerTec biometric terminal into a small box with some accessories and a CD that contains TCMS v2 software and all type of user guides. When all eyes are on the hardware which obviously take up the major space and weight in a box, we shouldn’t and couldn't ignore the software, the firmware, and the support system built around the hardware.

When pricing is the only considering factor, some customers would easily end up having to endure permanent glitches of their system every single working day, even though time and attendance system is just a threshold for workers to start and end their work by clocking-in and out.  We should be aware that when more rules apply, the calculations would be more complicated for time and attendance, besides extra issues of integration or export of data to your payroll system. To top that of, working hour is a sensitive issue and human resources is always one of the major costs for most companies.

For any industry products, don't get too caught up in getting the best deals in price in the procurement process.  No matter how low the price a product is, it is always wise to research before making any decisions. As the saying goes, there's no free lunch. 


by Teh Hon Seng, CEO, FingerTec HQ

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