You Get What You Pay For

June 2, 2022

Not long ago, Mark Silver received a call on an early Sunday morning from a frequent client of his Industrial Lock and Hardware shop in Palmdale, California. This customer wanted Silver to drive to a location outside his typical service area. However, Silver was happy to provide the service, because he knew that the client didn’t have the insured technicians to handle the job.

“So, like we always do with them, we’re like, ‘Hey, it's a long way. We're going to negotiate. How much are you going to offer?’” Silver says. “They counter with, ‘well, how much do you need?’ I said, if you go out to Bakersfield from our place, you're looking at least four hours.”

Silver gave the client the price, and while he broke down the costs, the client lamented that they had to padlock their front door shut the previous night. Finally, Silver estimated his final rate, knowing it was $300–$400 more than a standard call, but considered it reasonable for the long haul on a Sunday morning. The client said they had to get approval. Several minutes later, the client called Silver back and said the best they could do was authorize $95.

“I'm not driving four hours to do a service call for an hour,” Silver says now. “I have no idea what the problem is, but for $95, I’d rather sit at home and do my gardening which, I did. I just told them, ‘Yeah, that's not going to work for us. I’m sorry it didn’t work out,’” Silver adds.

Later that evening, Silver’s phone rang, and he had this conversation: “Hey, this is XYZ company. I’m calling about service for this particular outlet mall, which is in the middle of nowhere. Can you service?”

Silver quickly told his client no. He relayed to the caller that they had talked about it earlier in the morning and their offer had been insufficient. The distraught client continued that they had someone lined up, but he never showed, and now he wasn’t answering the phone — and that was six hours ago.

“I couldn’t help but smile and told her it was going to cost you well past $500 now, and she goes, ‘OK, I don't have a choice,’" Silver says. “I told her, ‘You did have a choice, but you chose not to take that option.’ This time, they agreed.”

As Warren Buffett once said: “Price is what you pay. Value is what you get.” Customers only will buy a product or service if they believe that the value they receive is more than the price they pay.

“Everyone should understand the price of a service call and how much it will cost to get someone out,” Silver says. “But price is just one part of the equation of an entire job, and it’s the least important part when you have an emergency and it’s your business.”