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"At What Cost?"

by Dave Balch, "The Stay-at-Home CEO"™

(c) 2001, A Few Good People, Inc.

Do you like to save money?  Duh…  Of course you do!  When you own your own business, you really appreciate the value of a dollar and want to squeeze everything you can out of each and every one.  Right?  RIGHT!  But at what cost?

I remember shopping for a laser printer about 10 years ago.  Living in a rural area, mail order is the way to go for me and I combed the ads in the back of PC Magazine.  Many of them didn’t even show a price; it just said “Call” and I did.  When I got the price I wrote it down, then discovered that terms varied.  Considerations such as shipping costs, credit card surcharges, sales tax if purchased within California, etc. all affected my bottom line cost, and whenever I discovered a new consideration, I had to re-dial the companies I already spoke to in order to get their policy on the matter.  I figure I spent at least 10 hours doing research.  I also figure that I saved about $50.  Pretty good, huh?  NOPE!  I probably could have made a heckava lot more than that had I invested those 10 hours in my business!

I’m not saying that it is a waste of time to shop for a good price.  Far from it.  But there is a line, however, that you should be careful not to cross because that’s when you enter the never-never land of diminishing returns.  In the first hour, I could have determined that the price of my printer wouldn’t vary by much.  At that point I should have just made a decision, ordered it, and moved on.  I would have saved 9 hours of my time and probably only spent $20 or $25 more than I did.  What I’m saying is that you have to remember to consider your time as part of the price

There are other considerations besides price and your time.  Availability, for example.  If I needed that printer for a project that had a deadline, there would have been a cost associated with getting it too late to do that project.  That situation may have made it worthwhile to pay more in order to get it sooner.  How about the out-of-pocket costs to purchase the item?  If I had to drive 100 miles round-trip to save $30 on the printer, is that a good thing to do?  No, because it will cost $34 in auto expenses (at the current IRS rate of $ .34 per mile).  Not to mention the time it would take.  Unless I really need that printer right now, it doesn’t make sense, does it?

The point I’m trying to make is that, no matter what you purchase there are tradeoffs.  Time versus money.  Convenience versus money.  Opportunity versus money.  Be sure that you consider all of the factors, not just the ‘sticker price’.  Whether you like it or not, the true cost is a combination of all of those factors.  Saving money is great.  But it’s gonna cost you!

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