Picture by Sora Shimazaki, Pexels
An acquaintance of mine has become the southern African partner for nice piece of European technology in the off-grid energy space. He asked me whether I would be willing to spread the word to potential customers, and I responded: "Sure. What's the entry-level price per unit?"
So here we are, on a Saturday afternoon, having a conference call with his German partner who proceeds to tell me about how brilliant his product is and its life expectancy is 20 years or more versus 5 years for the competition before I finally cut him short.
"I'm not interested in any of that," I say. "I just want to know the cost per unit. Then, when I pass on the message to people I know, they can make an immediate decision as to whether they can afford it before wasting time having a conversation with you only to discover it's outside their price range."
It's such a basic thing, isn't it? We expect products to have price tags. But people in the high-volume tech hardware space almost never put price tags on their kit. Let's go through some examples:
- Arms deals are almost never broken down to a level of understanding exactly how much one is paying for an individual component, such as a Gripen fighter jet or a MEKO A-200SAN frigate. The price tags get buried within jargon around local procurement of components and offset deals intended to create thousands of jobs which almost never materialize.
- Procurement of power stations is in the same category. The price tags for Medupi and Kusile are cases in point, masking the diversion of payments to Chancellor House .
- Locomotives and rolling stock for rail systems. Here's government-speak on South African procurement 8 years ago : "The unveiling of the locomotives comes after Swifambo Rail Leasing, a local company that PRASA outsourced the project to, awarded Spanish company Vossloh Group a contract to supply 70 new high-tech locomotives – made up of 50 Euro Dual electro-diesel and 20 Euro 4000 diesel locomotives." (Yeah, but where's the price tags?)
I'm convinced that the reason why these scenarios exist is because it allows for markups to rent-seeking middlemen (or women) to be buried in the overall transaction costs.
If someone tries to sell you something, and isn't willing to tell you the price tag, it's probably because he wants to see how much he can extract from you.
