What Does That Really Cost?

The cheapest option is not always the cheapest option. The management blog over at About.com has an introduction to the concept of Total Cost of Ownership. Here’s the start:

If I buy product “A” for $50 is that cheaper than buying Product “B” for $60? Well, that depends.

The concept of Total Cost of Ownership, usually abbreviated as TCO, helps us evaluate the true cost of the purchases we make for our companies, and for ourselves.

I would like to add another cost as well. I call it the “pain in the neck cost.” In other words, you need to look not only at the purchase price of the item and not only at the total cost over the life of the product, but also at the potential for problems and trouble and turmoil that the product will simply cost your sanity. This cost is intangible — you cannot necessarily assign dollars to it — but is just as real.

These days, when time is the new scarcity, the pain in the neck cost is more important than ever.

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June 8, 2009 | Filed Under Management | 2 Comments 

Comments

2 Responses to “What Does That Really Cost?”

  1. Chris on June 8th, 2009 10:08 am

    This is one of the justifications I use for purchasing a Mac over a PC. The “pain the neck” experiences that I have endured at the hands of a PC make them not worth the cheaper price. I would rather pay a higher sticker price for a Mac to help alleviate these “pains”.

  2. Matt on June 8th, 2009 10:30 am

    Chris: Same here! That is exactly what made me finally break down and switch to a Mac. And I am very glad I did!

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