Are your prospects choosing your cheaper competitor? Make sure they’ve counted the HIDDEN costs

When you’re shopping for something (whether for your household needs or your business) you are offered a range of choice. Multiple vendors, each with multiple products or services, provide you with many options. Your job as the buyer is to weigh the costs versus the benefits and choose the best one for you.

So the rational consumer lines up all the products or services, considers the rewards they get compared to the price they have to pay, and chooses the lowest-priced option that provides the greatest rewards.

… Well, that’s the way it’s supposed to work in theory but that’s not really what happens.

It’s hard for us to accurately assess all of the benefits and all of the costs; it’s hard for us to know which benefits and which costs are most important; it’s hard for us to see into the future and know what we really need. It’s all just guesswork.

So what really happens is: We look at our range of options, eliminate the ones that are obviously not for us, and pick the cheapest one of the bunch.

This is fine except that the cheapest option isn’t always the best option. (We know that to be true but we do it anyway).

While all of the benefits may seem similar between the cheaper options and the more expensive options, what we fail to accurately consider are the hidden costs.

One common area I see this among entrepreneurs is in marketing. Rather than hiring a marketer to help them, and rather than investing in marketing training, many entrepreneurs feel that they can save the costs of marketing by doing it themselves or by hiring the cheapest offshore help they can find. Of course, some marketing you CAN and SHOULD do by yourself. But many entrepreneurs see marketing (and copywriting and web design) as an unnecessary expense (when the DIY option is so much cheaper) and they skip the investment.

The benefit appears to be the same marketing result while the cost appears to be minimal.

But is that really what you end up with?

The costs are actually much higher

  • Time, effort, and creativity are needed to create the marketing content.
  • That time, effort, and creativity are spent on the marketing rather than on some other aspect of the business (therefore, those entrepreneurs not only spend it on marketing, they fail to spend it elsewhere).
  • They fail to put the right marketing in the right places — thus keeping the right people from seeing it and acting on it.
  • They spend that time, effort, and creativity on marketing that (often) fails to deliver the results we need.
  • They “use up” the attention of their audience. (Hat tip to Dan Kennedy for this excellent point).
  • They fail to establish credibility in the marketplace.

So the cost of the marketing seems low at first but it is actually high because of the hidden costs.

Lest you think this is a pitch for marketing services, let me give you another (non-business) example to show you that it happens elsewhere: It happens in home renovations and remodelling, too.

In some cases, it’s perfectly appropriate to do your own home renovations and remodelling. (I can do general plumbing like a rockstar, and I can have it done faster than the time it takes me to call a plumber). But in other cases, the cheaper alternative (either to do it yourself or to hire some low-end laborer) comes with a bunch of hidden costs (which is why I leave some more challenging plumbing to the plumbers I’ve hired). I’ve heard countless horror stories of renovations that are stalled indefinitely or of low-end laborers who get paid and disappear before the work is done. And perhaps the work will need to be re-done later by someone who has more skill and qualifications.

And I picked on home renovations in the above paragraph but you can swap that out for anything — car repair, website design, party planning, investing. This is the case with insurance and real estate as well. People choose the DIY option or the lowest-priced option but fail to consider all of the other costs — time, effort, a lower likelihood of success, a lower quality of success, etc. — in the thing they are buying.

Everything we buy comes with obvious benefits and costs and we need to weigh those. But everything we buy ALSO comes with hidden costs and we need to make sure we factor those into our pre-purchase consideration.


It’s not just you doing this. Everyone does this, including your customers. That’s why we get so easily frustrated when a low-price provider swoops in and steals away our prospects simply because that provider’s price tag is lower than ours. It’s not that our prospects and customers are necessarily cheap… it’s that our prospects and customers don’t understand the hidden costs.

Your marketing needs to solve this by highlighting the hidden costs. I don’t mean that you should necessarily rage against your low-price competitors in your marketing. That’s rarely the best choice. Rather, you should try some of the following:

  • List the hidden costs that people should factor into their purchase decision. Don’t list them “hidden costs” but instead list them as all the things that your smartest customers take into consideration before they bought from you. Make it a sort of “savvy customer checklist” that your prospects should think about when buying. You WILL lose some customers anyway because some people will disqualify themselves with this checklist but you will gain more and better customers.
  • Embed the hidden costs as topics in your marketing. But don’t leave them just as a mention of hidden costs. Instead, always state them in relation to the value you provide, bringing the conversation back to the benefits you offer.
  • Compare the field of choice for your customers. Do the research and provide a chart that compares your offering against your competitors’ offerings. (Be careful how you do this, and be respectful!). Use the chart as a way to highlight hidden costs.
  • Prior to purchase, restate the price of the product, the benefits they will receive, and the hidden costs they will avoid “paying”. Remember that people buy for the value they think they’ll get and they need to be reminded that the value includes saved hidden costs.

When your prospects leave your sales funnel to buy from a lower-priced provider, it’s not always because they are cheap. It’s often because they don’t realize the hidden costs.

Published by Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and other books.

Leave a comment