You need to understand this clearly. “We took the cheapest offer and had to pay double in the end.” This statement is heard surprisingly often from clients who primarily looked at price when selecting service providers. This article explains why the cheapest offer often becomes the most expensive and how to avoid this trap.
The Anatomy of a Cheap Offer
What Makes an Offer “Cheap”?
An offer is not inexpensive but cheap when the price is significantly below market level without a traceable justification.
Typical characteristics:
- 30–50% below market price without explanation
- Vague service description: “Everything you need”
- Unrealistically short time estimates: What normally takes 6 weeks should be done in 2
- Missing details: No milestones, no concrete deliverables
Why Do Cheap Offers Exist?
There are only a few reasons why a provider is significantly cheaper:
1. Lack of Experience The provider doesn’t know their own costs or massively underestimates effort.
2. Unrealistic Calculation The provider wants to get the contract and plans to renegotiate later (“scope creep”).
3. Quality Compromise Cuts are made in time, care, or material quality.
4. Bait Tactic Entry price is low, but almost everything costs extra.
Rarely is there a fifth reason: Excess capacity to be filled short-term. That’s the exception, not the rule.
The Hidden Costs of Cheap Offers
1. Corrections and Rework
The problem: Cheap providers often work under time pressure and deliver deficient results.
The follow-up costs:
- Corrections by the same provider (if willing)
- Correction by another provider (often more expensive because fixing others’ mistakes)
- Own time expenditure for complaints and coordination
Real example: An SME commissions a cheap agency for a website for CHF 8,000. The website has serious defects (slow, not mobile-optimised, SEO-faulty). Another agency must rebuild the website for CHF 12,000. Total costs: CHF 20,000 instead of the expected CHF 8,000.
2. Project Delays
The problem: Cheap providers calculate too little time or take on too many projects simultaneously.
The follow-up costs:
- Delays in own projects dependent on the service provider
- Opportunity costs (lost revenue, missed deadlines)
- Additional coordination effort
Real example: A product launch is delayed by 3 months because the packaging designer took on too many projects in parallel. Lost revenue in Christmas season: CHF 50,000.
3. Lack of Documentation
The problem: Documentation costs time not calculated in cheap offers.
The follow-up costs:
- Difficulties in maintenance or further development
- Dependency on original provider
- Higher costs for later changes
Real example: A software solution is delivered without documentation. Every change must be made by the original developer who now charges CHF 200 per hour. Annual additional costs: CHF 8,000.
4. Missing Quality Assurance
The problem: Quality assurance (testing, reviews, release processes) needs time and personnel.
The follow-up costs:
- Errors discovered only after go-live
- Reputational damage with clients
- Emergency fixes that are more expensive than planned quality assurance
Real example: An e-commerce website goes live with untested payment processing. Clients can’t order. Emergency weekend fix: CHF 5,000. Reputational damage: unquantifiable.
5. Missing Support
The problem: Support after project completion is rarely included in cheap offers.
The follow-up costs:
- Every question, every adjustment costs extra
- Waiting times because provider prioritises other projects
- Necessity to onboard another provider
Real example: After website launch, minor questions arise. Original provider charges CHF 150 per hour for support. Annual support costs: CHF 3,000.
The Mathematics: Why Cheap Becomes Expensive
Scenario Comparison
Provider A (Cheap offer):
- Initial costs: CHF 10,000
- Corrections (50% probability): CHF 5,000
- Delay (opportunity costs): CHF 3,000
- Support Year 1: CHF 3,000
- Total Year 1: CHF 21,000
Provider B (Market price):
- Initial costs: CHF 18,000
- Corrections: CHF 500 (included)
- Delays: CHF 0 (schedule met)
- Support Year 1: included
- Total Year 1: CHF 18,500
Provider B is not only cheaper but also lower risk.
The Risk Factor
With cheap offers, the probability of problems is higher:
- Corrections: 50–70% probability (vs. 10–20% with established providers)
- Delays: 60% probability (vs. 20%)
- Project abortion: 10% probability (vs. <1%)
Even if you’re lucky, you bear higher risk.
How to Recognise Cheap Offers
Warning Sign 1: Price Below Cost Reality
In Switzerland, there are minimum costs for professional work:
- Hourly rates: Professionals cost CHF 120–250 per hour (depending on industry and experience)
- Social costs: 20–30% on top
- Overhead: Rent, software, marketing, acquisition
Those significantly below these values either work voluntarily or make compromises.
Warning Sign 2: Speed as Argument
“We’ll do it in half the time” sounds attractive but is often unrealistic.
Reality:
- Good work takes time (analysis, concept, implementation, testing)
- Speed comes at the expense of quality or completeness
- Unrealistic timelines lead to stress and errors
Warning Sign 3: “All-Inclusive” at Package Price
A package price makes sense, but only when it’s clear what “all” means.
Ask:
- How many revision rounds are included?
- What happens with changes?
- Is support after completion included?
If clear answers are missing, “all-inclusive” is a trap.
Warning Sign 4: Missing Protection
Professional providers have:
- Insurance (liability, professional liability)
- Contracts with warranty
- Verifiable references
If these are missing, you’re saving in the wrong place.
When Is Cheap Actually Cheap?
There are situations where a cheap offer makes sense:
1. Standard Services
For commodity services without risk (e.g., translation, simple graphic design), price is a legitimate main criterion.
2. Small Projects with Low Risk
A simple flyer for an internal event doesn’t justify an expensive agency.
3. Test or Pilot Projects
When you want to test a new provider, a small, cheap project is a sensible entry.
4. Conscious Quality Compromise
Sometimes “good enough” is sufficient. If you consciously forgo high quality, a cheap provider is okay.
Important: The difference lies in the conscious decision, not in the illusion of getting premium quality at discount price.
How to Distinguish Real Value from Cheap Offers
Recognise Real Quality by:
Transparency
- Clear service description
- Traceable price structure
- Openness about limitations and risks
Process
- Structured approach
- Defined milestones
- Quality assurance
References
- Verifiable, contactable references
- Comparable projects
- Positive feedback
Professionalism
- Written offer
- Contract with warranty
- Insurance proof
Recognise Cheap Offers by:
- Vague formulations (“as needed”, “as much as necessary”)
- Lack of contracts or detailed offers
- No verifiable references
- Pressure for quick decision
Alternatives to Cheap Providers
If your budget is tight, there are better strategies than choosing the cheapest offer:
1. Phase the Project
Divide the project into smaller phases:
- Phase 1: MVP (Minimum Viable Product)
- Phase 2: Extensions
- Phase 3: Optimisation
This spreads costs over time and reduces risk.
2. Reduce Scope
Focus on essentials:
- What is “must-have”?
- What is “nice-to-have”?
A smaller project with a good provider is better than a large project with a bad one.
3. Combine In-house with External
Do parts yourself (e.g., content creation) and commission only specialised parts (e.g., technical implementation).
4. Negotiate Instead of Forgo
Talk openly about your budget. Good providers find creative solutions that fit your budget without sacrificing quality.
The Real Costs of Poor Quality
Poor work costs not just money but also:
Time
- Your own time for complaints, renegotiations, coordinating new providers
- Time of your employees who must work with deficient results
- Delays in other projects
Reputation
- Clients experience poor quality (e.g., faulty website)
- Business partners lose trust
- Internal credibility suffers
Opportunity Costs
- Missed opportunities through delays
- Lost revenue
- Competitive disadvantages
These costs are hard to quantify but often multiples of the saved costs.
The cheapest offer often becomes the most expensive because:
- Corrections cost more than the savings
- Delays cause opportunity costs
- Missing documentation leads to dependency
- Lack of quality assurance causes expensive emergency fixes
- Missing support costs more long-term
The calculation is simple: Quality costs less than correcting poor work.
Invest time in selecting a qualified provider. Price should be a criterion but not the only one. A fair price for good work is always cheaper long-term than a bargain you have to pay for twice.
In Switzerland applies: “Buy cheap, buy twice.” That’s not a marketing phrase but economic reality.