Can You Afford This?

I admit  that I can get wound up quite easily, and unnecessarily , by the words people use. Business jargon is a particular bone of contention, but why should it matter? It shouldn’t.  So going forward. I’m going to be proactive in pushing the envelope, so that at close of play it will no longer bother me. It’s going to be a paradigm shift for me…a game-changer.

But that’s for the future, and for now  there’s one word I’m hearing more and more which I think does matter. Because if you take it at face value without thinking about what it really means, it could cost you a great deal of money.

That word is…affordable.  A…bloody…fordable!

In the last few days I’ve read about affordable housing, affordable cars, affordable wristwatches, affordable road bikes and affordable 4k T.V’s.  The ‘affordable’ label is being attached to anything and everything, but what the hell does it mean?

Well I assume that it’s supposed to mean that prospective buyers have the means to purchase it. But is that really true, and is it in any way helpful if it is?

Just yesterday, I was looking at road bikes which fall into the ‘affordable’ category. Someone has decided that this is  somewhere around £1,000 to £1,500. Apparently £2,000 isn’t ‘affordable’ but £1,500 is. Why?  A few weeks ago, I read an article about affordable ‘wristwatches’ (it was an American article) and the price limit was set at $10,000.

In whose world  is that classed as ‘affordable’,  and how does that square with a bike only being affordable if it’s a fraction of the price? Are watch enthusiasts wealthier than cyclists? I think we should be told.

If you want proof of the worthlessness of ‘affordability’, you need look no further than that – two discretionary non-essential purchases with vastly different values attached to what is affordable.

But affordability isn’t just worthless, it can be financially harmful  too.  I think the affordable label is dangerous for several reasons:

  1. It annoys potential customers who don’t find the price affordable at all. How are you going to feel if you can’t  even afford the affordable? If a watch maker loftily calls it’s £6,000 model ‘affordable’, how does that make you feel? Like going and buying something from another maker would be my guess.
  2. It devalues something which may be a dream purchase for someone. Do you want to stretch yourself to the limit to end up with something dismissed as ‘affordable’?
  3.  It is fundamentally meaningless. What’s affordable to one person may be beyond the dreams of another. What’s unaffordable to one person could be pocket change to another.
  4. It shapes pricing and marketing decisions in ways that are not conducive to maximising profits.

This last issue  is where the real danger lies for you and I as business people. If we aim to make something ‘affordable’ to our potential customers, we should surely only do so when we have a very clear idea of their financial position and the importance and weight they put on purchasing what we sell. And who the heck has that?

And even if we do have that information, our customers are rarely (if ever) a homogenous group. Affordability will mean very different things to each  of them.

The reality is that we should only create products and prices after careful testing and not via some subjective  notion of what is affordable. At the risk of re-stating the obvious, what’s affordable to one is out of the reach of another, what’s unaffordable to one is pocket change to another…and what’s worth making financial sacrifices for, for one, is of little importance or consequence to another.

A  focus on affordability ignores the fact that there is a wide range of buying power in every market. Focussing on affordability ignores the needs of the more well-heeled who will almost certainly be craving something  exclusive and ’unaffordable’ to the masses. And this is frequently where the biggest profits are to be found.  Because in pretty much every product category I can think of, diminishing returns loom large. You don’t get an awful lot more for your money once price starts to rise above the market average – perhaps the point at which it  moves out of the so-called ‘affordable’ category. The incremental cost of turning a bog standard product into a premium one is often not that high, and considerably less than the uplift in price.

I hope I’ve been able to peel back the onion for you on this one and expose the elephant in the room. I know you’ll be empowered to really buy in to this idea now, take it offline and reach out….

Sorry I can’t go on. Think I’m going to be sick!

11 thoughts on “Can You Afford This?

  1. Mike

    John – Concise and to the point as always. The ‘A’ word has stuck in my craw for quite a while now, but I had never really stopped to reason why. Now I know!

  2. Juanita Aniello

    My sentiments exactly. Affordability is pertinent to the individual. Who can determine what affordability is, when society is made up of so many different income levels or even none income levels with people that are so far down the earning chain that they are only just eking out a living. I, like you, find it very insulting to have affordability staring you in the face on many goods, that one just can not afford. It makes you feel excluded e.g. affordable housing I find is very much beyond the price that actually is affordable to first time buyers, the market at which affordable housing is aimed at. It is ludicrous to state that something is affordable when it clearly isn’t. Perhaps the word affordability is used to persuade people to purchase goods beyond their means, in other words affordability is used more as a marketing term, than it’s literal meaning, enticing people to take out HP, or other loans to falsely bolster the economy.

  3. Phil Udell

    An interesting observation. Something that I have noticed quite a while ago is problems with the use of the word “cheap” in Google searches. If you want a cheap flight to New York (for instance), do not Google “cheap flights to New York” try putting “flights to New York”. That will probably bring up a better and (dare I say) more affordable result. I guess lot of people feel obliged to “enhance” the truth. This appears to apply to sales people in particular.

  4. David Skelton

    Thank you John for putting into words what I have thought for a long time. The word ‘affordable’ is subjective, and as you say, totally meaningless.

  5. David

    These are marketing ploys that may catch the punter or not? I think you are not averse to selling in this manner by putting forward the worth of your product and then cutting it and perhaps again with the final price being such a bargain that one just cannot refuse! That includes me.
    You were I believe mistaken in including “affordable” housing. This is not a free market but an artificial market created by politicians.
    Their actual affordable housing is actually quite expensive, to build, then they take the rental value of an equivalent? l property in the local market. And reduce the rent asked of the tenant by a quarter. This is now affordable!
    They then use the argument that there are so many people on the waiting list to convince us that there is a desperate need for affordable houses. Am I ranting, probably and so should we all.

  6. Peter Kenworthy

    It’s very simply the buyer, and the buyer only, who decides if something is affordable.
    The seller can never determine this for someone else, and should never belittle the buyer like that.

    But the usage of our beautiful language is gets poorer by the day.

    My two current pet hates ………………….

    1. “See you later” every one seems to say. I always where and why, do we have an arrangement I have forgotten about.

    2. “Brown or white toast ?” – I always ask ” Have you ever seen white toast ? It doesn’t exist !”
    All toast is brown, or on occasion black. It is the bread that is brown or white.

  7. Reed

    If its not quantifiable or is subjective then don’t use it.

    Affordable definitely falls into this category as its both non-quantifiable and subjective.

  8. john marks

    Hi John,

    Great article.

    I think I’ll run it up the flagpole and see who salutes. While that’s going on I’ll employ a little ‘blue sky’ thinking. 🙂

  9. Neville Ring

    Interesting blog — the word unaffordable has real meaning. As a pensioner it occurs very often in my vocabulary . If you can’t stand the word affordable, consider the opposite, an army of us out here could explain it to you fully.
    Neville Ring

  10. Catherine Lewis

    I do like your blogs. The two I have read so far have had me murmuring and mumbling in total agreement? Sensible comments about irritating things!
    Too many words and phrases are used in a meaningless way ( all too often by politicians who are amongst the worst offenders. Don’t start me on “hardworking taxpayers”…..). The cliches are trotted out without any intelligent thought. And after a while we stop listening.
    Is that the idea or do they think we are actually fooled by such phrases?


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