People often interchange price and cost, but it’s important to recognize the significant difference between the two. Remember the old adage, “Beware the cost of the lowest price”? Well, it rings true. Just because a product is less expensive than its competitors’, doesn’t mean you (or your business) save money in the long run. Sometimes, perhaps most times, you end up spending more in part because of time and efficiency lost to a mediocre product. Or, you could potentially spend twice as much as you’d originally hoped because you have to buy a replacement for that first purchase. Ouch.
So what’s the difference between ‘cost’ and ‘price’?
Price = The sticker price of what you’re buying.
Cost = What you stand to lose in time, efficiency, problem-solving, etc. if you don’t consider your return-on-investment.
And that’s what it comes down to for most major purchase decisions: return on investment. Where do you stand to gain the biggest bang for your buck? For businesses, the point of purchasing a product should be how it improves a process or system. In the end, if there is significant cost-savings in personnel time or improved staff efficiencies, it’s worth the extra money up front for the long-term benefits.