I was likewise surprised to note that throughout the meetings “adding value” seemed to be used interchangeably with “lowering cost.” In several of the monthly installments of this column, we have made the assumption that the two were sometimes linked, with some actions to add value necessarily lowering cost. But not all value adds lower cost. I suppose you could say that value adds either add value at no cost, at a cost the customer is willing to pay, or they lower cost, making the product or service more appealing in itself. Up until now, we've covered mostly ways to add value at little or no cost.
This month, let's talk specifically about adding value by removing cost. The danger here is to limit value adds to being just another weapon in the price war. While that may be true as it relates to cost reduction, that mentality might close your mind to the many value additions that could actually end up costing your customer more and making you more money! That said, offering your products/services at lower prices because you've squeezed down your costs can be a very powerful approach. It's a win/win. The customer gets a lower price and you maintain your margins.