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Value Added Ep.16 – The Cost of Incompetence (Why Cheap is So Expensive)


24 Aug 2020


Every business owner tries to cut corners and reduce expenses.

After all, slashing your overheads is one of the fastest ways to make more profits.

But trying to achieve your business goals on the cheap can end up being enormously expensive.

This week, Jarod and Jonathan share tales from deep in the trenches of incompetence.

Find out what they learned the hard way, so you can avoid making the same mistakes yourself…


“The sunk cost effect is the general tendency for people to continue an endeavor, or continue consuming or pursuing an option, if they’ve invested time or money or some resource in it.

That effect becomes a fallacy if it’s pushing you to do things that are making you unhappy or worse off.”

Christopher Olivola, Carnegie Mellon Tepper School of Business

  • If you buy a product or service at the lowest price, be prepared to lower your expectations as well.

“Sometimes you literally just can’t afford whatever the solution is.

That leaves you one or two options: increase your budget or lower your expectations” Jarod Spiewak

  • Jonathan recounts the story of spending over $50K and wasting a year and a half on the wrong developer.

    Eventually, he started over from scratch with the “more expensive” option of hiring a professional web development company.

    Although the financial outlay looked much higher at the outset, ultimately, working with a team of experts ended up costing far less time and money.

“Anytime I’ve had a bad experience working with less experienced people or cheaper contractors, I don’t place the blame on them.

I put the blame on myself for not realizing what my real requirements were at the time.

So I’m not trying to throw shade at them, it’s actually me ridiculing myself for being so naive to think that I could hire someone at that level to get the job done.” Jonathan Kiekbusch

  • When Jarod first started his agency, he would hire the cheapest freelancers he could find. The cheapest content writers, the cheapest VAs, etc.

    Over time, he found that even if he was getting some decent results from an SEO perspective, the product he was delivering to clients simply wasn’t good enough.

    Clients were unhappy with the quality of the content, and it was holding him back from being able to land bigger accounts.In the past two years, Jarod has nearly tripled the amount of money he spends on producing content. But he has no regrets as he feels the quality is worth it.

  • Don’t underestimate the demoralizing effect parsimony can have on your team if you’re constantly going for the cheapest (and likely worst) options.

    This applies to everything, from the software you choose to the office furniture.

    Forcing your team to use inferior tools is likely to have a long term negative impact on your business.

  • For agencies, clients reluctant to spend the money to hire competent staff can be a major headache.

    For example, if your point of contact for web development is in way over their head and can’t make the changes you request in a timely and efficient manner, your ability to deliver the results your clients expect is severely diminished.

    Similarly, if the person in charge of content doesn’t have a clue, much of your hard work can go to waste.

“It’s essential to think about the compatibility aspect of the products and services and people that you hire for your business.

Every building block, every “Lego piece,” that you’re using to put your project together has to be compatible with all the others.

And if it’s not, then you’re going to create churn. You’re going to create friction and a lot of the time, people don’t realize that until it’s too late.” Jonathan Kiekbusch

  • Don’t be cheap when it comes to setting prices for your products and services. Almost inevitably, this will have a negative impact on the perceived value of your offering.

Subscribe to the Value Added Podcast — featuring SEOButler founder Jonathan Kiekbusch and Blue Dog Media head honcho Jarod Spiewak — to be notified about future Live Streams and Podcasts.


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