The biggest concern that plagues the owner of a company about to invest in machinery is knowing the right price, i.e. the price that reflects the real value of the machinery. One must take into account both the utility that the machinery will bring to the company and its maintenance and operating costs. The real value of the machinery is expressed by the selling price. Several elements contribute to the formation of this price, including inefficiencies and …cost deficiencies.
But what is the utility of the machinery? The utility of machinery is the capacity of the machinery to satisfy the need that motivates its purchase. This need, referring to one or more stages of the production process, is both quantifiable and measurable.
It happens that customers are often confused by smoky marketing operations and do not pay due attention to the usefulness of the machinery. Instead, they focus on those elements artificially created by the manufacturing companies to mask their own inefficiencies and cost shortcomings.
Let us try to understand this better.
Cost inefficiencies are structural additional costs that the manufacturing company incurs and always passes on to the customer in the form of higher prices.
Cost deficiencies (from the Latin “deficiĕntĭa”, derived from the participle of the verb deficere meaning to lack) are the highest price the customer pays more or less unconsciously. He pays them due to a lack of information about the existence of cheaper alternatives with the same machinery utility.
While the former are endemic to the organisational structure of the selling company, the latter are peculiar to the customer and can be if not avoided at least mitigated by the latter. How? Through a careful identification of needs first, and then a framing of product specifications. These activities will allow the customer to compare offers and evaluate them rationally, minimising the negative influence of emotional variables in his decision-making process.
In conclusion, the mix of inefficiencies and cost deficiencies can have a significant impact on the final price of a machine. Customers can, with the right approach, induce companies to address their internal challenges. They can force them to invest in product and process innovation, personnel training and optimise the supply chain in order to keep costs down and offer more value to their customers.
Having clear in mind the need and specifying it in quantifiable and measurable terms summarised in the concept of utility, helps the customer not to run into the traps of cost inefficiencies and deficiencies and not to pay overcharges that are not justified by the real value of the machinery.
