How Much Do You Value Your Time?
Imagine you need gas on your way home from work. Up ahead you see two gas stations, one of either side of the road. The one closer to you on the right is $0.08/gallon more expensive than the one on the left. To get to the cheaper station requires you take a left turn against traffic to get into it, and another on the way out. It's 5:45pm and traffic is moving thick and slow in both directions.
Which station do you choose?
You can see what's happening in this little thought experiment. What we're really curious about is how much you value your time, in addition to your money. If taking two left turns against rush hour traffic adds 6 minutes to your commute, is that worth saving $0.96?
Or put another way, is arriving home from work significantly less frazzled worth $0.96 to you?
So the next time you face a purchasing decision, here's some helpful questions to ask:
What's the total cost of ownership of this product or service? Be sure to include the time you spend researching, acquiring, setting up, maintaining, storing, and supporting this new thing.
If we choose the more expensive option, what do we stand to gain in terms of convenience, ease of use, access to support, or simply the benefit of having the thing now rather than later?
How much time is required to fully utilize the new tool? What's the opportunity cost of not dedicating that time to something more productive?
Most products are priced in a "good - better - best" framework. Where's the sweet spot between price and value? In other words, where does the marginal gains of the more expensive item begin to diminish relative to the increased cost?
Imagine yourself at some point in the future. Which product or service is more likely to still be beneficial to you?
Some products should be bought on price (HDMI cables, match sticks). But others benefit from asking these kind of questions.
Just because something is cheap, doesn't necessarily mean it's a good deal.