Why “Pick Two: Good, Cheap & Fast” is a Fallacy in Pricing Software
“Good, Cheap, Fast: Pick Any Two” is a business aphorism that’s been around for ages. This saying is echoed in other pithy truths such as “You Get What You Pay For,” “There’s No Free Lunch” and “You Can’t Have Your Cake and Eat it Too.”
There’s a constant tension between quality, price and speed-of-delivery for most if not all B2B products and services. This seems especially relevant these days with more pricing solution providers entering the market with offerings that promise the world.
We’ve heard from many companies experiencing remorse after falling victim to the fallacy of Good, Cheap & Fast - which more often results in Poor, Costly & Late. Buying into this technological folklore can really set a firm back when the need to upgrade pricing capabilities is long overdue, budgets are tight, competition is stiff and results hang in the balance.
A good place to begin examining this myth is to set some context for what each of these three attributes might mean and how they work with and against each other, before giving some examples of what these factors might look like when acquiring new pricing software.
Good: Speaks to the quality of the product or service. Buyers will often subjectively confuse ‘good’ with ‘best.’ ‘Good’ may get the job done in the short term, however ‘best’ is likely to exceed expectations in the long run. In IT purchases, and especially when buying a price optimization and management solution, choosing ‘best’ could actually mean selecting the right partner with the right solution for your needs today and tomorrow. The best solution anticipates the evolution of technology and your business processes and needs, thereby avoiding obsolescence and the need to replace/upgrade in the near term.
Fast: In technology terms, ‘fast’ could mean a new system can be implemented very quickly, which of course is a relative term. Many of us have heard the analogy from our IT staff: “It takes nine months for a baby to be born and nine women can’t make a baby in one month.” It’s true that professional services can be scaled to a point based on the resources assigned. However, realistically, there are limitations to this scaling. The process of delivering a complex pricing system requires dependencies and a passing of time that can’t be rushed or avoided. Delivery promises that use the term ‘fast’ most likely include ‘shortcuts’ that can negatively impact the desired outcome and performance of the solution.
Cheap: It may seem an obvious and desirable consideration, especially to the purchasing department: a lower price is preferred. However, it might not be that simple. The lowest price may not mean the lowest total cost of ownership. Often there are hidden fees or more services needed (which you or someone else may need to provide) in order to make a solution even work, much less perform optimally. There might also be unanticipated costs down the road that you must absorb that perhaps were not budgeted. ‘Cheap’ is the one area you can always count on to surface the deepest regret the fastest. Reputable suppliers with the most experience and the best credentials rarely are the cheapest sources. ‘Cheap’ usually means someone is offering a low price in order to buy their way into the market. While you may seem to be the beneficiary of this strategy, who’s to say this low-cost provider will be around six months or a year from now, or even two years from now, when you may still really need their support.
Now that we have an understanding of each attribute, how can we apply these to purchasing a pricing solution for your B2B enterprise? Let’s take a look at three potential business cases where they might apply in various combinations.
Tale of 3 of Buyers
Buyer #1: “I don’t care what the ideal solution costs, just get us one, and get it fast!”
This buyer wants a solution that is good and fast, suggesting they want the very best solution available, delivered in the least amount of time. In this case, the buyer does not care how much it costs. But is that really realistic? Every project has a budget. Every IT expenditure at any significant level will be scrutinized for its impact on the financials. In order to plan for and justify the investment, the project must support an adequate return. This buyer may not fully understand the total cost of ownership, may not be considering all the costs associated with the project or naive to the possibility they are dramatically overpaying for a pricing solution that performs to expectations and can be delivered when needed. They may also be so blinded by the need to get something in place they have not adequately considered the total investment necessary to meet all their needs.
Buyer #2: “I don’t care what it looks like, get the least expensive system that meets all my requirements and I need it this quarter.”
The buyer that only wants fast and cheap without consideration for performance, quality and results may not be in their role for long. That, or they have not have thought through the long-term effects of a sub-optimal pricing solution on the performance of the business. In this case, they are hoping whatever is available on the market will be sufficient, which is rarely the case. They are also hoping they can get something in place quickly. While this combination is possibly available, it is likely the lowest-performing of all offerings on the market and offered by the least experienced and qualified vendor.
Buyer #3: “I want the very best at the lowest price. We’re in no big hurry either. Even if our results are poor, our team is overloaded and stressed and we’re not getting the most out of what we have now.”
The buyer that’s focused on the best features (good) combined with a small price tag (cheap) has perhaps the most unrealistic combination of expectations. Additionally, they could be undervaluing the timely acquisition of a solution to address current business problems such as margin leakage, shrinking market share or customer churn. They are unconcerned with getting to market with a solution that may save time, money and resources and greatly enhance financial results. With no or little regard to delivery time, a project could be outdated before it’s implemented, either in terms of business requirements or technology. It’s very likely to lose momentum as other IT projects are proposed and prioritized, potentially placing this one on the chopping block before it’s even been delivered.
Buyer #4: Finding the Right Solution and the Best Partner
Perhaps there’s a better way to look at buying a technology solution to upgrade your pricing capabilities. What if instead of “good, cheap, fast,” the buyer is looking for the best overall combination of quality, speed to market and price? What if the buyer is looking to build and keep the momentum going, deliver great performance while acquiring the solution with the best ROI and overall value? What would that look like?
It’s important to realize there is no combination that gives the buyer the absolute lowest price with the quickest delivery time that meets or exceeds requirements, every time. If it existed, and it doesn’t, it would be the ‘Holy Grail’ of IT projects...pursued by many, found by none.
But while a ‘Holy Grail’ may not exist, the optimal pricing solution for your company very likely does and it can be discovered by making sure you have done these five key things:
1) Have a clear understanding of your requirements before you engage the market. Know what you and your team need and make sure your requirements are developed and shared with all stakeholders to ensure you’ve captured what your business needs to succeed now and in the future. If you need help, Zilliant provides a highly consultative sales process where we work intimately with your business to discover your needs and design a solution that’s right for you.
2) Find out what is offered today in the market to supplement your current identified needs. You may be surprised to learn there are things you want or need that you didn’t know existed. Survey the market to make sure you understand the capabilities that are available. A great place to discover the latest and greatest capabilities available for B2B pricing is by checking out Zilliant’s innovative, market-leading price optimization and price management solutions.
3) Make sure you have a budget in mind and a required ROI for the project. You may also get help building the business case. You can start by accessing Zilliant’s self-serve customized benchmark report. It’s a great tool to help your company identify the potential upside of upgrading your solution based on actual industry benchmarks we’ve developed by analyzing billions of B2B transactions across hundreds of global manufacturers, distributors and service companies.
4) Have a realistic target date to put these capabilities in place. You will need to think about timing, for internal purposes, as well as scoping and setting expectations for the project with potential vendors. Make sure potential partners have a proven framework and experience in delivering technology projects on-time and within budget. Also, check that they have a good track record maintaining systems beyond the go-live date, so you aren’t left hanging after you sign a contract. Learn how Zilliant delivers on its commitments and helps customers succeed long after they choose us as the preferred pricing technology partner.
5) Choose and closely consider your criteria for evaluating potential partners. Begin by identifying a list of potential vendors and understand how each fit into these categories (quality, speed, price), as well as other important factors you might wish to consider. Make sure your shortlist includes companies with strong customer references. You can learn how other companies are benefiting from Zilliant solutions by listening firsthand to our customer success stories.
The most important decision you will make in this process is not solely about price, how good the solution promises to be or how fast it will be delivered. Rather, the most important decision is always: “Who’s the right partner for my business and who can deliver the best combination of attributes for my particular needs?”