What does it cost?
For the consumer, the cost of a project tends to be synonymous with the price of the project. However, value is what we get for the price we pay. For example, if you have a mechanic change the brakes on your car. There is the cost of the parts, the materials, and of course, the labor. The price is what you pay to have the work done. But where does value come in to play? Value can come from any number of places, as long as it is real.
Hypothetically, there's 2 mechanics, both equal distance from your home. Mechanic #1, is open 8am-5pm. He is a one man show, answering phones, scheduling appointments and working on the vehicles, he uses whatever parts the local supply house has and he's willing to work with you if there's an issue with any of the work he does. His parking lot is always full and people go to him because he's friendly, honest and affordable. He does take a while to get back to customers, sometimes your car is there for a few days for a seemingly simple repair. He often says things like "I'm hoping to get to it today." He is pretty disorganized when it comes to billing and providing receipts. But he is consistently 20% cheaper than the the guy up the road, even cheaper if you pay cash.
Now, Mechanic #2. In addition to himself, he has a secretary, a lead mechanic and an apprentice working in his shop. He uses only manufacturer approved (OEM quality) parts. In addition to the manufacturers warranty, he has a 60 day warranty on everything he does. He is open 7am-7pm and provides 24 hour towing services. He takes cash or credit cards, and he even offers financing through a third party. His secretary handles all of the front office work and you get a text message when your car is ready for pickup; with a link to pay online. His repairs are typically 20% more than Mechanic #1, but working with him is easier and you are confident in his warranty and reputation. He also has same day turnaround every time you've gone there.
Both mechanics have a cost and a price associated with there work. However, mechanic #2 has value added services that offset the added cost. At the end of the day, both mechanics are replacing your brakes. The prices are only 20% apart, say $250 vs $300. With mechanic #1 you get a one on one interaction and you know the guy is fixing everything himself. Knowing only one person will be working on their project tends to make customers feel more confident. Additionally, all his receipts are hand written.
With mechanic #2, you typically interact with the secretary, the mechanics are in the back working on cars all day. They will only call you directly if something is more complicated and requires technical discussion, otherwise the secretary handles all communication. She is knowledgeable and experienced in the industry. She always answers the phone. In the shop, every repair is looked over by the lead mechanic and then test driven before being signed off on. Your warranty information is printed on the receipt as well as emailed to you. You can also pick your car up anytime until 7:00 pm so there's no need to leave work early. If there's an issue within the 60 day warranty he will tow your car for free, if it's needed.
At the end of the day, we all want the best price and the best value. However, this is rarely the cheapest or less expensive option. In the end, the lower the value, the higher the cost. Price is what you pay, regardless of value. When we make small purchases it's easy to overlook price for convenience or perceived value, example: "buy one get one free." When we make large purchases, we can get stuck looking at price and rationalizing lower value to justify a competitors' cheaper price. But at what cost?
There are sayings like, "buy once cry once", or the Captain Samuel Vimes “Boots” theory of socioeconomic unfairness.
Vines wrote: "But the thing was that good boots lasted for years and years. A man who could afford $50 had a pair of boots that’d still be keeping his feet dry in 10 years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet."
In the end, value is what we get. Price is what we pay. Cost, sometimes, is yet to be determined.
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