Should Virtual Services Cost Less (or More)?

Whether you sell things that are going virtual, or you buy things that are going virtual, it’s worth reading this article to equip yourself with the information you need to know about the cost(s) of newly virtual offerings. 


We’re not going to dive into the pros and cons of the differences between the virtual and non-virtual version of offerings here, because that’s very specific to the product or solution itself. But rather, we’ll focus on the discussion surrounding cost in general; what the trends have been historically, as well as considerations that factor into a price increase, decrease, or stability.


Virtual Doesn’t Mean Cheap


In general, when a service “goes virtual,” people’s first instinct is to assume that the cost will decrease. People think that the new “virtual version” of a product or service should be less expensive. 


Years ago, with the rise of the internet, banks were some of the first organizations to start implementing online services. Today, most of us have traded in cash for credit cards, and in-person visits to the bank teller for mobile check deposits. 


With online banking now the norm, banks charge more for in-person, tangible service and even offer discounts for going virtual or “paperless,” as many banks call it. Because the virtual version of their service costs less for them to provide, it’s cheaper for their customers; and conversely, their in-person services are more expensive to provide (think mailing costs, payroll for tellers, etc) and therefore more costly to the clientele.


But this general assumption (virtual costs less) doesn’t always hold true. 


Many years ago, electric cars came onto the market for the first time. These new vehicles had no moving parts, no fluids, no engine, no gas, no oil; just a battery with wheels. On the surface, it’s very simple. But still today in 2020, even though they’ve been in production for many years, and have been developed considerably, electric cars remain more expensive than their regular counterparts (for example, compare the Toyota Prius vs. Toyota Corolla). 


So it’s not always the case that something newer and seemingly simpler, such as virtual offerings, is cheaper. In fact, sometimes, it’s just the opposite: it can cost more. 


One industry that’s been in the “virtual arena” for awhile now is online learning and education. In 2018, Forbes published an article about the cost of online education programs.


Based on a survey of 182 academic institutions that offer both on-campus and online programs, here are some noteworthy numbers and stats regarding cost:


  • 74% of colleges reported that the cost was identical for their online and on-campus courses


  • 23% of colleges charged more for their online learning option


Therefore we can deduce that the virtual learning option was cheaper for only 3% of those colleges surveyed. 


Some Factors that Determine Change in Cost


To check in on our original question: do virtual things cost less


The answer is: it depends.


There are really two factors to consider that help determine this answer:


  • The value to the consumer and the overall cost to the consumer


  • The cost to the provider to deliver it virtually


Let’s examine some real life examples to illustrate:


  • Telemedicine


With the COVID pandemic, many doctor’s offices have taken their patients’ appointments online. But the newly virtual (or phone) appointment still costs the same. There’s no “discount” from the doctor’s office to patients for going virtual. 


But some insurance companies may. For example, United Healthcare offers a free in-app service called “HealthiestYou” where patients can schedule on-demand appointments with healthcare providers. 


  • Training 


Chances are if you’re reading this article, you’re interested in training, and sales training specifically. We wrote a recent article that goes into more detail on the actual cost of a virtual sales training – but for our purposes here, we’ll stick to general increase vs. decrease discussion in terms of cost. 


For the customer, the cost of virtual training is actually lower. While the cost of the training itself may remain fixed, without travel costs, hotels, and having to pull reps from working, it becomes a much cheaper option overall. 


For the training provider however, the cost is the same, if not higher. Delivering a training virtually requires the same level of expertise, thought, and curriculum development, with the added component of having to pull it off virtually in a format that makes sense and works for the participants. 


Here at ASLAN, we spent a great deal of time in development, taking our traditional, time-tested workshop and translating it into a virtual version. We also added new components to augment the digital format, and hired additional support resources or “producers,” to help with the technology side of the virtual delivery. So on our end, the cost of our virtual offering increased.  


  • Services 


This category encompasses a wide variety of different products and services now being offered virtually. In many industries, the sales process now looks completely different. Reps may be spending less time onsite, decreasing travel costs and time spent in transit. They may be conducting product or service demos virtually


But on the other hand, this new virtual world may require sending out different/ additional equipment or offering more support resources from experts to customers, which in turn would increase cost.


“It Depends”


The moral of our “Should Virtual Services Cost Less” story today is not particularly conclusive… but the key takeaway and true answer is: it depends. 


It depends on the specifics and particulars of the product or service and the provider. 


As a seller, your costs might increase when shifting to deliver your offering virtually. So you may end up charging more for your virtual services. 


As a buyer of virtual services, you’re best equipped to understand your vendor’s new costs and figure out where you are paying less in the transaction (i.e. if you have no travel costs, your overall cost may actually be less, even though you’re paying more for the virtual service itself). 


We hope this information has been helpful in assisting you, as buyers or sellers, to understand why virtual offerings may not necessarily always cost less. As well as well as help you generate ideas on how to manage those costs, discuss them with your vendors or customers, and justify your budgets accordingly. 


For more information on selling virtually, we invite you to sign up for a free 15 minute consultation with one of our Senior Business Strategists. 

As President of ASLAN, Marc is responsible for all day-to-day operations including our sales and marketing efforts and growing our success in helping our clients be Other-Centered®.

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