We all crave a bargain, especially entrepreneurs chasing the best deals on goods and services. In a perfect world, we would always land a low price and top-notch results. True harmony happens when value and price align. But too often, that rock-bottom price balloons when someone has to step in and fix or redo a purchase that turned out to be more trouble than it was worth.

I’ll admit that I’m drawn to a low price. Yet, after more than twenty years in business, I’ve learned to be cautious of work that’s simply cheap. While I love a good deal as much as anyone, the rates I offer my transcription clients aren’t the lowest, but what I consider an exceptional value.

Hardly a week passes without our team being asked to rescue a botched transcription from a competitor. We appreciate the business, of course, but I can’t help but wonder why clients leap at the lowest rate without weighing the quality of service.

Comparing price, cost and value

Let’s start with the fundamentals. When you buy a product or service, price, cost, and value are three distinct concepts. As a rookie entrepreneur, I learned this lesson the hard way. Here’s how they differ:

• Price is what we pay for a product or service
• Cost is the total amount paid for the product or service
• Value is the benefit derived from the purchase

At my company, we keep transcription pricing straightforward. A basic audio file with one or two speakers gets a low, flat rate. If the recording has three or more voices or is riddled with background noise, the price goes up a bit. Extras like verbatim transcription, rush jobs or timestamps are available for an additional fee.

Figuring out the per-minute rate is a breeze. Clients know exactly what they’re paying, and I can quickly see my margin. Because we guarantee 99% accuracy, I keep a close eye on every job to catch any issues before they eat into our profits.

Cost is a whole different story. Almost every day, someone calls us to “fix” a subpar transcription. Because we rely on skilled human transcriptionists, fixing these files usually means starting from scratch. That so-called bargain the client thought they scored now ends up costing much more. 

Value is all about the benefit the client gets from the final product or service. When we handle the work, I can ensure that value stays high by training my team to resolve client issues quickly and efficiently. But if a client has to use their own resources to fix mistakes or hire someone else, costs go up and value slips away.

Understanding your needs

Some purchases are simple. If your new office needs copy paper, you pick the type, compare prices and buy it. Even if you end up with lower-quality paper, you can probably still use it. Unless poor buying decisions are made over time, copy paper is hardly a make-or-break decision.

Buying a fleet of delivery vehicles is a whole different ballgame. Scoring a low price on cargo vans might seem easy, but you also have to factor in repairs, maintenance, fuel and other costs. Spending millions just to save a few hundred thousand can backfire badly if you skip a thorough cost analysis. It’s a classic case where a low price doesn’t guarantee great value.

Most company purchases fall somewhere between copy paper and major equipment. In my experience, services trip up businesses most when they skip proper vendor research. That’s why it’s crucial to truly understand what you’re buying. Know exactly what you need, and set clear expectations for the quality you want delivered.

This is where many entrepreneurs and business owners stumble. Service responsibilities often get handed off to front-line managers, but do they really understand your expectations?

For example, one manager hires the service provider, another oversees the work. When the results fall short, who handles quality control? One manager manages the budget, another manages execution. If someone has to fix or redo the work, whose budget pays for it?

In the end, hiring the wrong service provider hits your bottom line as you shell out extra money to fix their mistakes.

When your purchase doesn’t match expectations

Entrepreneurs and business owners are always balancing price, cost and value. The global pandemic at the start of this decade disrupted the quality of goods and services everywhere.

When supply chains broke down, prices for goods shot up. In many industries, service costs climbed as it became harder to find skilled workers. The result? Higher costs and less value.

That’s why, in today’s business world, it’s more important than ever to make sure your purchases meet your expectations. Here are a few things to keep in mind:

• Understand the product or service you are purchasing
• Review and confirm any steps the vendor provides to ensure your expectations are met
• If the product or service doesn’t match expectations, what are your options?
• Calculate and measure costs and value on the front end, not the back end

After 20 years as an entrepreneur, I’ve learned plenty, often the hard way. Lower quality and higher prices might be the new normal, but I refuse to lower my standards for the goods and services I buy for myself or my company.

Additionally, I don’t believe my clients should lower their expectations for the transcriptions we provide. Spending additional time performing some basic due diligence on the front end will definitely save you money and cost much less on the back end.

“Fixing” inferior purchases

Nearly every entrepreneur understands that making certain your team is making strategically sound decisions will pay off in the end. Nonetheless, there are circumstances when poor purchasing decisions require immediate action. 

Some fixes are easily resolved by requesting the provider address the problem or by allocating internal resources. The issue with internal fixes arises when your staff doesn’t have the time or skills to address an inferior purchase. 

Could a company or agency handle transcription in-house? Possibly, but the time, skills and resources required are often out of reach. An experienced transcriptionist spends hundreds of hours mastering the craft. If you’re counting on AI transcription as a quick fix, you’ll be disappointed.

A recent comparison of AI transcription software produced a 62% accuracy rate. That’s a far cry from the 99% accuracy rate that I guarantee my clients. Many transcription companies that advertise low rates contract overseas workers who don’t understand complex business, legal and medical terms, so they rarely deliver accuracy and quality.

Reality prevails

The reality is simple. I can’t make my own copy paper. My fellow entrepreneurs can’t build their own delivery trucks or design intricate machinery. I can’t personally transcribe hundreds of files. That’s why we hire skilled staff or source from trusted vendors.

Unless your company specializes in “fixing” inferior purchases, entrepreneurs must adopt a realistic approach. Fixing an unsatisfactory purchase remains an expensive endeavor. Developing a basic understanding of the goods and services you acquire can minimize an inferior delivery. Otherwise, your bottom line and customer satisfaction will suffer.