Everything is a commodity... NOT!

So, this is a topic that I have thought about for years, and now seems a good time to talk about it. The idea that A/V is a commodity. There has been a movement over the last few years (about a decade, really) by corporate accountants and purchasing departments to view meeting services, including A/V, as a commodity, and price it accordingly.
To understand how wrong this is, we need to first look at what a commodity is...
from Wikipedia:

A commodity is anything for which there is demand, but which is supplied without qualitative differentiation across a market. In other words, copper is copper. Rice is rice. Stereos, on the other hand, have many levels of quality. And, the better a stereo is, the more it will cost. The price of copper is universal, and fluctuates daily based on global supply and demand.

One of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, ethanol, salt, sugar, coffee beans, soybeans, aluminum, rice, wheat, gold and silver.

Commoditization occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and silicon chips.

So, right off the bat, I would put our industry more in line with stereos than with coal, and the intellectual effort to produce and manage a good meeting, while under-appreciated, is still quite necessary.

The idea that a three day meeting for 100 people with 4 breakouts should cost X, because the lowest bidder, or worse someone with no knowledge of the industry who put random pieces together and priced them, said it should cost X, is equal to saying that the outcome of the meeting is not important, only the price is.

Imagine you are buying a car. Someone told you that "cars" cost $6,000. So you go into every car dealer and tell them that you want a car for $6,000. Now, as long as you don't care about new or used, size, quality, appropriateness for your needs, reliability... I guess you could come up with some options, but if you have any expectation of quality or durability, things (prices) will change quickly.

Another way to look at this, imagine you go into a Ford dealer and price a Focus. Now, you take that price and go to a Mercedes dealer, and you say "hey, the Ford dealer said I could get a car for X price, I want you to match it". Hey, a car is a car, right?

A show is a show, right? A projector is a projector, right? A technician is a technician, right?

Sadly, all too many companies in our industry are willing to play this game, thinking it is smart business, a way to capture market share. What it really does is erode prices, destroy margins, and hurt all companies in the long run. There is always someone willing to do it cheaper, but there is rarely someone willing (or able) to do it better. We built our business on providing high quality service and gear at a fair market price... not the cheapest price, a fair price. I pay my guys near the top of the range, I make sure they have a good room, I make sure they eat well. I am asking them to be away from their families and provide an ultra high level of customer support, which they do without fail. they deserve to be compensated for it. They're not the cheapest guys out there... my clients don't want the cheapest guys out there and neither do I.

Next time you go out and buy something that is important to you, notice whether you bought the cheapest, or the best you could afford... not necessarily the most expensive, but the best you could afford...

Full disclosure, I own an A/V company, Lawall Communications

www.lawallcommunications.com

But that does not change this simple fact: Value is value, the worth of a thing purchased. Value is different from price. A cheap price makes something cheap, it does not make it a good value. High quality at a fair price makes something a good value. Shop around, think it through, find the best value, not the cheapest price.
Happy New Year!