Call me an advocate. Call me obsessed. Call me hard-nosed. But price shoppers who make myopic buying decisions strictly based on acquisition price deserve whatever misery follows their shortsightedness. Too many buyers jump over dollars to save pennies. Acquisition price is a small part of the value customers receive. Price is what they pay; value is what they get.

Value is a function of three things: price, cost and impact. Looking only at the acquisition price is like looking only at the tip of an iceberg. The real story is beneath the surface. How many customers have been duped by a cheap acquisition price, only to discover that the ownership and usage costs had a negative bottom-line impact?

It's a fallacy to believe that a cheap front-end price is the most efficient way to buy. It is one of the laziest ways to attempt to save money. Cheap does not necessarily equal efficiency. The buyer's premise is that all products are the same and all suppliers are the same, which is not the case.

What good does it do for a buyer to purchase something cheap that may result in higher usage costs? When companies allow purchasing departments to make unilateral, one-dimensional buying decisions, they deprive themselves of the advantage of using their own technical talent to evaluate the best long-term alternatives. Worse than that is the company that delegates or outsources their purchasing to another company that specializes in grinding down vendors. Now there's a way to build relationships.

Oscar Wilde wrote, "A cynic is someone who knows the price of everything and the value of nothing." The value of something is bigger than its price — it's what it costs the customer to use, service and dispose of it. If one product outlasts another, it may be more cost-effective in the long term.

Peter Drucker said that one of the three biggest problems with American managers is that they have a short-term, quarterly mentality. This management myopia is passed down to the purchasing department. Companies that pay purchasing agents a bonus for buying cheaper versus controlling overall costs foster a silo mentality in their own companies. Their own technical people begin to view purchasing as the enemy.

Impact is the third variable in our value formula. Impact is the effect that a product or solution has on the customer's world. If the buyer pays more for something and it gives his or her company a competitive advantage, it's a bargain. If the buyer pays more for a product that improves the quality of his or her product, it's a great investment. Impact answers the question, "What do we give the buyer the opportunity to do tomorrow that they can't do today?"

Looking only at the acquisition price may deprive the buyer's company of the greatest benefits they need.

Tom Reilly is author of the books \Value Added Selling and Crush Price Objections. You may reach him at tom@tomreillytraining.com or call him at (636) 537-3360. Visit his Web site: www.tomreillytraining.com.