Price vs Value

Finding a good deal seams to be top of mind for everyone these days. Certainly when you are looking for a Product it makes sense to compare that product’s price from different sources to ensure you are getting the most for your money. I do that on a regular basis, however, when there is a level of complexity to the product I am looking to purchase, for which I do not have the knowledge, I need to rely on an expert to guide me through so that I can ensure I choose the right product for me. In these cases I do not look for the best price, rather I look for the best value. The value is not just on the product but also on the guidance I receive from the expert. Sometimes that may mean paying a little more.

Some people will take the knowledge that have learned from one expert and use that to purchase the product from someone that can provide a better price, but provided no value. Not Cool!!!

I think we see this in Government tenders quite a bit, where price is the only factor and things like quality and timeliness mean nothing.

One of my favorite signs I saw up in a local shop and was able to find on line:

 

Many of the products in my industry (IT) have come down in price, and at he same time the complexity of the products is increasing.  I remember a time when Firewall only needed 5 commands to get it working and the price was well over $15K. Today a Firewall with much greater horse power may only cost $5K but requires a certified engineer to enable all of it’s features. The Ratio between the Hardware Cost and the Resources required to “Make it Work” use to be 5:1 but these days can be closer to 1:1.

Making this even harder to swallow are the licensing costs we are seeing with many of these products. No longer do the traditional Hardware manufactures want to just sell you hardware and hope you’ll come back in 5 years for an upgrade, now they want you to buy the hardware and license features annually. Some will even go as far as disabling the product if you don’t continue the license.

Many tools have be released to help manage these products more effectively and that has had an impact on the costs associated with my core business (Managed Services). However the number of new features available offset these new efficiency’s.

So in the past a solution that may have looked like this:

Hardware: $15K
Maintenance: $1K
Professional Services: $1K
Managed Services: $250/mth

Over three years the TCO = $26,000

May now look like this:

Hardware: $5K
Maintenance + 3 Year Licensing: $7K
Professional Services: $1K – $5K depending on the feature sets enabled
Managed Services: $150/mth – $400/mth depending on the feature sets enabled.

Over Three Years Best Case TCO = $18,400
Over Three Years Worst Case TCO = $31,400
Over Three Years Average TCO = $24,900

As you can see things have not really changed that much from a TCO standpoint. The costs have just moved to other areas.

My point here is that in the new model the expertise and value is of greater significance than the product itself. There are lots of vendors out there touting that their product is the best and yes some are better than others in certain aspects of what they do, but the product alone provides no value if it hasn’t been configured correctly for security performance and monitoring.

Don’t make the mistake of buying on price alone!

 

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