Forget Cost! Think Value!
June 6, 2009 Leave a comment
Very often, people look at the price or cost of something in order to make a decision as to whether or not the item or service in question is worth it or not. Looking at cost alone is scary in my opinion. Ideas surrounding cost versus value have been around for a very long time, and I think it’s worth taking the time to think about. In this post I will start with a layman’s analogy regarding cost and value. While reading this, please don’t think that the point of this blog posting has anything to do with a product like an iPod. It doesn’t. It’s not a review – it’s an analogy about realizing the benefits of thinking value first, then cost.
Think about the following analogy:
I just recently purchased a 16GB iPod Nano. My point about this is that I was reluctant to buy any kind of MP3 player for a long time. I figured I have CD’s that I can burn MP3s to (Music, audio books, podcasts, etc) so why do I really need a portable MP3 player. I thought, if I really needed to listen to music or an audio book “on the go” my cell phone gives me that capability. Plus – those darned MP3 players are so damn expensive.
The reality was:
-Burning audio files to CD and listening in the car was tedious and time consuming – there is no way I could keep up to date with the realm of great podcasts that are out there
-My cell phone has a horrible built in media player that is not ideal to use while driving – I just end up not using it at all
-I was thinking cheaply– I didn’t want to spend the hundreds of dollars just so I could listen to audio books and podcasts on the go when I had other, albeit less effective ways, of doing so
I changed my thought process around this and looked at it from the value perspective – these are some facts surrounding the decision:
-The 16GB iPod Nano had a cost to me of about $225 (including tax)
-It’s a solid product
-Synchronization between PC and iPod is smart, fast, and easy
-There are so many podcasts, and audio books out there that provide so much educational value – This information is easily found and accessible with iTunes
The purchase decision based on value:
The educational value alone provides unbelievable value to me, and being able to easily search for audio books and podcasts and sync it to the iPod makes it so simple. In a few minutes I can find, download, and sync a large quantity of quality audio casts that I have at my disposal for listening to in the car or anywhere on the go. Without this ability (in the past), I had burned some audio books to CD and listened to them, but it was so tedious and annoying – so usually I didn’t bother.
The audio casts provide me with views on technology, career, success, software architecture, consulting, investing, and many other things. It’s now a great tool to assist in my education and learning. Based on what I can do with this product, I would put the value of this product way above the $225 I paid for it. What a great place to learn – while driving! (Note: I do enjoy listening to music too).
Now, I could have went cheap and bought an off brand 16GB MP3 player for half the price. These MP3 players didn’t have the synchronization with iTunes, so easily syncing to podcasts and audio books would be out of the question. They usually have a more manual synchronization process that could be more tedious. For me, I found the best value in the iPod. For someone else who just wants to listen to MP3 music or does not need the synchronization then by all means for that person, the right value may be found in a simpler MP3 player as they would get no additional benefit by spending the extra money.
Also, I could have done nothing, but I don’t have the time and patience to burn CDs every day of the most recent educational audio material.
Ok, so what’s the point?:
Ok, now if you are thinking “Dan, your blog is about IT and Personal Growth – no one cares about your iPod” you may be right, but you’re missing the message. Take this iPod analogy and apply it to something bigger such as investments, business ideas, or projects at your workplace. Look at the value versus the cost in determining which projects to move forward with. Remember that the value provided should give an indication of what cost should be accepted, if the cost is higher than what it should be (or what it’s worth to you) it’s probably something that should be reconsidered. In addition, in the case of a project, changing the project variables can sometimes increase value and negotiating can sometimes decrease cost.