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What are cheap alternatives? In my case is any airplane flight by Delta or Ryanair. Other examples of such products or services are: winter clothing, sport apparel, laptops, designer and architect services. All of them are high in cost (and can’t be consumed periodically), however you can find cheap alternatives, that for some people might be good enough. The big dilemma is not how much you are saving, but are they really cheaper or good enough? Evermore, is how big is the risk compared to the benefit of finding out if they are good? Here is example:

Recently I took a transatlantic flight with Delta (part of it operated by Air France), from Sweden to Honduras and back. At the moment, this was was the cheapest flight I could find. Overall, the services was really bad compared to my previous flights with British Airways. First, the planes that took me from Paris to Atlanta was uncomfortable. Clearly the design of the seats and screens was not for long haul flights. Second the stuartists where not as friendly, however the worst thing is that when going and coming back, my luggage was delayed one day. In Honduras I had to go to the airport and pick it up the next day, in Sweden it was delivered to me. It was pain, it was inconvenient and the risk of me losing my stuff got higher. What will had happened, if my luggage was lost? Means that the trip will have actually cost more than a proven but higher in cost, such as British Airways.

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Was my case a anomaly? I don’t think so. I was warned before about Delta delivering the luggage  a day after. My theory is that this saves them “fuel money”, by sending the heavy luggage with other airlines. However, me elaborating on it will derailed me from the point of this post. Which is:

Companies that offer you a cheaper alternative in a competitive market, generally will  shave indirect costs from other places, which will contribute to providing a cheaper alternative, but lower in quality.You will not be able to find out how bad the quality is, until you used it.  Or sometimes they just sell you the most basic and functional part of it and charge for all extras.  Same happens with winter apparel. Cheap jackets could only last for a couple of winters, then you will have to buy a new one. Also with architects and constructors, sure they can build you a house at half of the market price, but at the end your house or flat will have more deficiencies if you agreed to pay the market price. At the end of the day companies discriminate their customers through prices: you want the good stuff, pay for it, if not then settle for the minimum and any goodies will cost you.

The dilemma is that sometimes you just need a jacket for a winter, or the inconvenience of the Delta service is just for a few hours. Tolerance becomes a habit and we start to make excuses for the companies! We consider them for the next time, instead of demanding high quality service.  Yes! It is also hard to complain to customer service and demand something back. Also, is so hard NOT to save 300 USD in a flight. Or we like to “gamble” and see if we are one for the lucky ones that get the mediocre experience (instead of the bad one). Like once I was told in a Negotiations workshop: humans are not rational beings.

Next time you are juggling with a decision on purchasing a cheaper alternative, ask yourself this: can you afford to buy the cheap one and the expensive one at the same time, because that is what most of the time we end up doing and worst is that we feel unsatisfied.

Recently I went for 6 days to Poland and took flight on Wizzair (a budget airline). When on the flight and pondering on how they cut costs and make flights that cheap (compared to the regular airlines) I came up with the following analogy:

Latte is to regular airlines as regular coffee is to budget airlines

Makes sense right? Well if it doesn’t I give you an explanation. When you buy a Latte you don’t just get coffee and milk mixed up, you get more. The milk goes through a special process, when given to you it looks nice (with a heart figure), tastes differently and looks more complex. However if you look at the ingredients is just coffee and milk, same happens with regular airlines. In essence you get to reserve a seat in a plane, they take your luggage (and you) from one point to another. However is not just that, you get nice service, complementary drinks, stuff for your kids, 2 pieces of luggage per passenger, etc. In contrast budget airlines, just move you from one point to another. If you take luggage (other than the one in the hand) you pay for it, want extra leg room pay for it, there is no seat assignment just a reservation and any complementary drinks or nuts, your right, you have to pay for it.

The interesting thing is the shift during time, first we had regular coffee and regular airlines and then we had some shifts in how we saw things, thanks to culture, trends and unfortunate events. The act of drinking coffee became more than drinking a hot beverage, became a statement. The Mocha, the Latte, the cappuccino, all started to say a lot of the individual, even if it didn’t cost much to add that extra to the coffee and turn it into different alter egos (Latte, Mocha, etc.), still coffee shops started to charge almost double for it.

The practice describe of charging a high price for “pimped” coffee is called practice is called price discrimination.  Regular airlines have been doing this for a while, that is why first class is so good and economic is so uncomfortable, if not they will not be able to charge the high prices for first class (a make a really good profit of it). But in this age of budget airlines and high oil prices, people want to travel as cheap as possible. So instead of shifting from basic to “pimped” like was the case of coffee, air transportation shifted from regular (or pimpled) to budget, cheap (or un pimped.)

All this is important for customer to understand, that will help them not be tempted or take better decisions when buying a product or service. In the case of business, well if done right they could find a group of customers that will buy their “pimped” product/service at price that has high return.