There’s an old story about a man who hired a carpenter to stop his floorboards from creaking. 

The carpenter walked across the floor, took his hammer from his bag and banged a nail into 3 of the boards. 

With the problem solved, the carpenter charged his customer £80.

The homeowner complained that £80 was a bit steep for banging in 3 nails. 

The carpenter explained that the nails were just £1: the other £79 was for knowing where to put them.

You may have heard a version of this story before, but it illustrates a problem we have when paying for anything. 

How do we know if what we’re paying represents value for money? 

Value for money is hard to quantify, and the criteria we apply to determine it depend significantly on what we’re buying and the importance we attach to that product or service. 

With products, it can be pretty straightforward. If you want a tin of beans, you can pay a bit more for a branded product or cut back and buy a supermarket’s own brand, and why not? 

After all, it’s just beans.

Buying a new car is a bit trickier because there’s a lot of difference between a top-of-the-range luxury car and your average family run-about, added to which the car you buy probably says more about you than your choice of beans. As a result, we attach far more ‘significance’ to high-value purchases. 

Significance is the intangible part of the equation because we make value judgements based on things that only matter to us. 

We do something similar when we buy services, but the criteria change:

When we buy a product, we can measure its worth and apply significance to a tangible object. When purchasing a service, we’re forced to determine the value based on nothing more than a hoped-for outcome. 

Of course, hoped-for outcomes also come with varying degrees of significance attached, and we know that if it’s a vital service, it will usually be reflected in the price, so the cheapest is seldom the best way to go. To illustrate this, here’s an extreme example.

An NHS heart surgeon is paid between £40K and £120K per annum, a broad spread based on experience and seniority. It would be hard to imagine anything more significant than the choice of a heart surgeon, 

but if you, unfortunately, needed that service and could afford to pay for a private surgeon, which end of the payment scale would you choose? 

I imagine that you would get the most expensive available. 

Logically, the more experienced surgeon would have the best chance of delivering that hoped-for outcome, and the operation would be carried out faster and more efficiently. A less experienced surgeon might take longer, but then again we don’t measure the value of professionals by the time taken, only by the results achieved.

Hopefully, you will never need a heart surgeon, but you may have the option of choosing between a business service that works on a fee basis or someone billing by the hour. In this case, similar criteria should be applied. 

If you’re looking for a successful outcome, you need a company that values what it does and bases its fees from the outset upon the belief that it can and will provide a good result. They are the ones that represent actual value for money. 

Professional businesses feel comfortable charging a fee because it’s based on a belief in their ability to deliver what they promise. 

The less professional only feel able to justify themselves by basing the final invoice on the hours listed on a timesheet.

When buying a professional service, you need to be clear about the outcome you are hoping for and then determine what that outcome is worth. 

The choice may not be a life or death one, but it’s not ‘just beans’ either.