The Right Price
The most frequent request asked of Scotwork consultants is ‘Teach me how to know I have paid the right price’. It comes from a lifetime of self-doubt; that although the negotiated deal looks like a good one, satisfies the need, resolves the conflict, addresses the issues and falls within the levels of affordability, there is a demon nagging at the back of the brain. ‘Sucker!’ says the demon, ‘you could have done much better than that’.
It begs the question. What is the right price? For a commercial procurement manager you might think the answer is easy – one that will enable the firm to make a profit. Buyers want to pay no more than the market price, preferably less, and their performance indicators may well articulate this expectation by requiring them to pay lower and lower prices year on year.
So it was refreshing to read a report by Bloomberg that the Japanese sushi chain Kiyomura paid a little more than market price to acquire the first tuna fish sold at auction at the Tokyo fish market in 2013. Well, perhaps that’s an understatement. They paid US$1.76 million dollars for a single fish weighing 222kgs. About $8,000 per kilo. Now good quality tuna at my local supermarket fish counter is expensive, but that’s just ridiculous.
So why pay so much over the odds? Is it because there is good luck attached to buying the first catch of the year? If so, you would suppose that this tuna would have an extra cachet and could therefore be sold in the restaurants at a premium. But it won’t be. Kiyomura restaurant owners reckon that this fish will cut up into about 10,000 sushi pieces which they will sell at their regular price of 128 yen each ($1.47). Leaving them with a loss of $174.50 per piece.
Or maybe it was worth it as a PR stunt to get the restaurant brand name into the media in Japan and around the world. Which is f