Years ago I sold a range of products for a supply company. We catered to the automotive industry but we sold virtually anything we could make profit on. We had Famous Amos cookies and we had paint booths, we had office furniture, sandpaper and janitorial supplies. We always tried to cater to our customer’s desires.
I had one customer that always wanted the strongest, biggest trash bags we could get for them. I don’t recall the exact price but I do recall these bags as costing 4 times more than any other bags we sold. I watched as this customer routinely used these thick, expensive bags to carry used forms, documents and printouts to the dumpster. While I didn’t turn down the sales I was perplexed that he paid so much just to take out the trash and literally throw the companies money away.
However, I also learned at this job that the lowest cost option is not always the best option.
Another customer was the cheapest of penny-pinchers. He only wanted the cheapest, thinnest trash bags he could purchase. He probably spent a quarter of the customer paying the premium. Knowing these cheap bags had a tendency to break they would double and triple up the bags in each can. Still, on more than one occasion I recall his staff complaining about how these bags would break dumping trash all over the floor. They then had to go to the extra effort to get more bags and clean up the mess. How much more did this customer spend in labor because they bought the cheap bags?
With this thought in mind, as an avid DIY’er I will balance the cost to the quality and usefulness of every tool or supply that I purchase. When we buy paint we consider that the cheaper paint may need more coats. When we purchase steaks, we consider if a flank steak will satisfy our craving instead of filets.
We must consider our true needs and then purchase the right product to serve these needs for the best price, and the best price is not always the lowest price.
Personal financial management is not one approach, one investment, or one choice. We must always balance needs, wants and options. Many small but smart decisions will add up to significant long-term financial growth… or destruction.
Can you share an example of how low cost was not the best cost? Share with us by leaving a comment below.