There is a great scene in the 1994 Quentin Tarantino movie, Pulp Fiction where Mia Wallace (Uma Thurman’s character) orders a $5 milkshake. Business consultant types use Mia’s expensive tastes to illustrate one of the Five Ps that constitute marketing’s basic tenets; in this case Price.
Any self-respecting MBA will tell you that Price is a function of Cost + Value. In other words, the cost of the milkshake’s ingredients has little to do with its price on the menu. The lion’s share of the five dollar price tag is to pay for the value added to the shake by it being served at Jack Rabbit Slim’s trendy themed restaurant. The Jack Rabbit brand is the added value making up the “Price equals Cost plus” equation.
The point is that Mia’s date, Vincent Vega, played by John Travolta, thinks five bucks was a lot to pay for some ice-cream and milk; but he is curious what makes it “worth” the money. When it arrives, he has to take a sip. In Marketing-speak, Vega has suspended his aversion to the sticker price for long enough to “give the brand a chance to hook him.” We might say that the display in the store window has stopped him in his tracks and he has walked into the shop. Vega has become a potential customer of the $5 shake, and is ready to be “sold” or more precisely, closed.
You may or you may not be a fan of Tarantino, milk shakes, and Uma Thurman, but the odds are that you “own” a brand. The smart bet is that you fit into the model that describes the majority of consumers, and there is something you buy regardless of its price because you value the brand – Lacoste polo shirts, Guicci fashion, Louis Vuitton luggage, Christian Louboutin shoes and bags, Roger & Gallet soap, Rolex watches, the list goes on, and it includes a whole raft of everyday products and services, not just the luxury brands.
In the business of marketing, which is business pure and simple, selling brand awareness and ownership to the target consumer is issue number one. Discovering what price the market will bear for that brand comes a close second; and is driven in part by a deep belief that quality has a bearing on price. High price equals real value; discount price equals low value. “Starbucks coffee really is worth the extra few dollars because it is so much better!” True or False?
Now let’s change gears entirely; let’s apply what we have learned from Tarantino’s milkshake, and a double, skinny latte to buying technical diver education. Specifically, let’s break down cost and value of a technical program to explain price.
Take my situation as an example. Let’s say that I need to build a new business plan and my financial “guy” – a true eccentric with credentials in law and forensic accounting – has asked to see a detailed breakdown of an “average” course. Because of his background, and because I have known him since the era of the “Blondie is a Group” button campaign, bullshit is totally not an option.
To work then.
The cost of materials and the cost of delivering a day of training per student can be worked out with the help of last year’s stats, some informed estimation, and careful scrutiny of all the things it takes to maintain active status as a technical instructor. This includes all the normal cost of business items needed to run a diver training facility from insurance and paperclips, to $2400 drysuits and vehicle maintenance.
I prefer to have this figure worked out to give a dollar figure per student per day. This means that if a program takes one day or ten, ballparking a cost is simple multiplication. Working this way does mean that my business plan projects similar per day costs for a simple intro to tech class conducted at a maximum depth of about 20 metres and a much more complex advanced trimix class held in 100 metres of water, which skews some of the fixed costs. But that’s OK. Accordingly, we will say this number is X dollars per student per day.
So that’s cost, now how about the added value; what do I add to a course that justifies me charging more than a straight $X a day, 4 x $X for a four-day program?
Because teaching is what I do, the value component is important to my survival and has to supply me a living wage; a profit. But is that an added value for my customers? I don’t think so. In fact it has nothing to do with it unless I market my classes as a sort of Support Steve Lewis’ Lifestyle Program. And I do not think that will work too well.
But if that is not the value, then what is? Perhaps this is where another P of marketing should be brought into play; what exactly is the product or service that I sell… that YOU will sell?
Well, we could itemize a whole list of things, time, security, adventure, empathy, a slightly off-kilter perspective, a scientific mindset, bad knees, green thumbs, etc. But it really boils down to experience. I have accumulated a lot of experience diving and teaching. By the time you start to teach technical programs, my hope is that you too will have a store of experience to dive into when faced with the eager faces of a class filled with students ready and willing to have you take them to some god-awful depth in the back of a decaying hunk of steel and wood surrounded by water moving at a couple of knots.
Perhaps also important on the Richter Scale of earth moving experiences is that you are still interested in building your personal experience. Simply put, this translates as: Dive for fun and occasionally, do something that shakes you out of complacency. A really well-known instructor I know says that part her value statement is that she is always scared.
So what’s all that worth I wonder? That stuff is the added value! All I have to do to satisfy the new business plan is to put a per-day cost on all that and fire it off to Mr. Bean Counter. So how much? Does $Y sound about right?
I like good pottery. In particular, I love simple pottery bowls.
Perhaps I like them because I have tried to make a pot and with authority can tell you that I am the second worst potter alive in the world today. In any event, I appreciate the space a good bowl takes up, and knowing this someone told me a story one time about a famous Japanese Zen potter who was being interviewed by a writer from a big circulation American magazine. As the journalist was asking questions, snapping photographs and taking notes, the potter continued to turn his treadle and throw pots. During the course of the interview, three or four dozen perfectly formed bowls took shape on the potter’s work bench.
With the interview drawing to a close, the writer asked how much one of the bowls would cost. “About four or five hundred dollars,” said the potter. “Holy shit,” the journalist said, rather undiplomatically. “Five hundred bucks and they take you about 30 seconds a piece? Wow!” The potter laughed and said, “well, that’s not exactly true.” He picked up another ball of clay and threw it exactly onto the center of the spinning wheel. “Today is my birthday and I am 77 years old. So this pot I am making now took me 77 years AND 30 seconds to make!” He looked at the journalist and smiled. “How long does it take you to make 500 dollars?”
No, thinking about it, perhaps $Y is not enough.