If suppliers are under charging what are they cutting or haven't included in their costs? Are you willing to risk your business sites reputation on it?
All too often I have people come for a quote on their website project or maintenance. Sometimes they are gracious to tell me they have chosen another vendor, sometimes I just don't hear back. More often than not later on they come back with, "I wish I had gone with your proposal. I chose the cheaper version and the person didn't do a good job or didn't do the maintenance work and there were hidden costs. I lost all that time building my companies place on the web."
If you are getting a cheap price chances are good that your other vendor hasn't factored everything in. Not by malice, but very often just because of inexperience. They just don't know what they don't know. The cost to run and maintain quality equipment, secure hosting, well programmed and maintained extensions and software, the cost of the years of learning and experience, it all comes with a cost even when utilizing an Open Source CMS. There is also the cost of living which we all have to pay.
This great piece by Seth Godin sums it up.
The race to the bottom is unforgiving and relentless.
I ordered some straw hats for a small party. The shipper sent them in a plastic bag, with no box, because it was cheaper. Of course, they were crushed and worthless.
I wrote a note to the company's customer service address, but they merely sent an autoreply, because it was cheaper.
And they don't answer the phone... you guessed it, because it's cheaper.
Of course, you have competition. But the big companies that are winning the price war aren't winning because they've eliminated customer service and common sense. They're winning because of significant advances in scale and process, advances that aren't available to you.
Organizations panic in the face of the floor falling out from under their price foundation, and they often respond by becoming a shell of their former selves. Once you decide to become a cheap commodity, all of the choices you made to be a non-commodity fall victim to your pursuit of cheap.
Cheap is the last refuge for the marketer who can't figure out how to be better.
The alternative is to choose to be worth it, remarkable, reliable, a good neighbor, a worthy citizen, leading edge, comfortable, trusted, funny, easy, cutting edge or just about anything except, "the cheapest at any cost."
Thank you to Seth Godin for the great reminders and for your daily emails. I read them every day.
Read the article and other great content on Seth's Blog: In Persuit of Cheap
