PRICE VS QUALITY- Do I have to choose?
When looking for suppliers, companies are always trying to get reasonable prices and good quality, and many believe that they must sacrifice one of these aspects to obtain the other. But it doesn’t have to be that way, or at least not in a complete sense. Both elements are core in the manufacturing world, and a brand that wants to grow cannot do it just by thinking only in pricing or only in quality.
In the world of wholesale products, the undeniable truth is that the economic pressures are causing decision-makers to let price and cost savings factors dominate when finding solutions.
Before allowing this aspect of the business to drive the sourcing decisions, it is crucial to think about the relationship between how a product is priced and quality. This relationship is essential for the end consumer and the buying company because these two aspects should not be separated when looking for a reliable supplier for a long-term business.
How is the price defined?
To understand the product’s real value, you first need to know how the suppliers determined their pricing. This way, you will understand what is included in the final offer the manufacturer gives you and why the cost can be higher or lower than their competitors.
There are many pricing strategies that a producer may have, depending on their goal. As a buyer, you must understand the factors that they may consider when setting this strategy. These aspects can go from production cost or competition to price sensitivity or band value.
In many situations, a supplier may decide its price by merely comparing with its rivals, simply out of fear that its customers will buy the goods elsewhere. There are even buyers who intend to ask for lower bids under the comparison or threat of going to a cheaper supplier. However, this practice is not healthy for either side since it can compromise the product’s final quality or the business relationship.
Product pricing is more than product quality or materials. As a buyer, you should know that the cost of a product may also include additional services and other costs surrounding the product itself, like the cost of transactions, communication, support, delivery, and general reliability of the supplier. All these factors increase the quality of the service that a supplier provides.
High prices are not the same as high-quality products. However, many companies implement practices to reduce their rates to the lowest possible level to keep up with today's competitive market. In this increasingly challenging climate, the companies are shouldering the cost increases in raw materials, instead of passing it on to the client.
All this pressure to reduce costs has forced the supply chain to use technology and increased performance methodologies to products at a low cost. However, the price reduction is only short-term tactical with a limit on how much the price can be reduced and remain viable.
To face this scenario, some suppliers have also applied a “cost out” strategy to innovate, remove waste on the supply chain and create value that justifies their prices.
This kind of approach helps the manufacturer control the production process and know how to obtain the best result with lower prices, which creates a good and reliable supplier.
Wholesale deals are better business for suppliers and buyers because the prices are lower, the quantities are larger and recurring purchases are more frequent. However, this perspective should not force a focus on the amount of profit that can be taken out of the contract as this can result in inferior quality products.
And, while we can all agree that price is important, it is also true that quality is the main factor to ensure long-term loyalty and satisfaction. That’s why it is crucial to build good communication with the suppliers so it can guarantee a long-term relationship.
Focusing on extremely low prices is one of the biggest mistakes that many wholesale buyers regret in the long run. This focus that does not take into account quality can end up with a massive amount of products that do not fulfill their purpose.
On the other hand, no matter its price, a quality product brings a long-lasting relationship, a well covered need, and a mutual trust with the seller and the final customer.