The “value triangle” establishes the quality, speed, and price tradeoff options available for your products and services. It is anchored by the reality that you can have two of these values but not all three.
Use it as a decision tradeoff framework for best meeting your customers’ price sensitivity relative to product quality and speed of acquiring your solution to their problem.
Another way to think about your business model is to look at your business through the “value triangle” involving quality, speed, and price. It’s commonly understood that you can have any two of these values, but not all three. Because this simple statement is a truism, it provides an excellent framework for considering both the price sensitivity attributes of your customers and the importance of where you conduct business, as shown in the following:
- Good, cheap service won’t be FAST
- Fast, cheap service won’t be GOOD
- Good, fast service won’t be CHEAP
- Good, fast, and cheap is UNLIKELY
For example, if you live in Los Angeles and just learned that you need to be in New York City tomorrow morning, it will cost you a high premium to get there. You need to be there quickly robs you of the alternative to fly more economically. Whereas, if you know you need to be in New York City, you have time to shop for the best airfare.
Highly profitable businesses are built around the need to provide a product or service quickly. They have the infrastructure in place to turn things around fast. The downside is that this ability is associated with higher costs—so services like this won’t be a bargain for the customer. Think FedEx. Then think about the local courier service that will deliver your package even faster than FedEx. They only care about your delivery when you transact with them. The good news is that you know it will get there when you need it to; the bad news is that it’s going to cost a lot of money for speed and convenience.
Highly profitable businesses are built around providing just enough product functionality at the lowest prices. The challenge with these highly process-disciplined businesses is they can’t deal with rush orders; if what you are seeking is not on their shelf ready to hand over to you, then it’s going to take as long as it’s going to take.