Winning the Family Finance Game
All business entrepreneurs must carefully evaluate costs of items or services. Money can disappear overnight if you don’t. What we purchase is always influenced by cost.
Most retail marketers understand the value of appealing pricing. That is, to price items so they appear to be less expensive than similar items. We may price something at $7.77 rather than $8.00 for psycho9logical reasons. This approach may not always be wise, however, in all business models or situations.
But what happens to us when we are trained to make business decisions based on the lowest price? In certain instances, the least expensive choice is adequate; in other instances – maybe in most instances – you get what you pay for. Can you imagine opting only for the lowest price when you need a heart replacement?
Some of us have been raised to believe that we \cannot afford things that appear expensive. But what does this term mean? Value is not always determined by how much an item costs. For instance, consider the recent price of gasoline in our country.
The price of gasoline continues to escalate, with little we can do about it. So how do we adjust? Do we ride bicycles, or walk instead of driving? Do we take public transportation? Our lives must go on, as must our businesses, so we adapt. We change. We make adjustments.
The majority of our citizens will continue to drive, no matter what the cost of fuel Many of us have no choice. We either drive or we go out of business. Some can take the bus or train, but these forms of transportation are not available to every citizen. How do you get to the supermarket, or school, or other important destinations? Fuel is a necessary cost–not necessarily gasoline, but our government hasn’t seen fit to explore other options.
In business it’s particularly important to evaluate the future value of an expense today. That is, wheat is the return likely on investing in a piece of essential equipment, as versus buying a new car or leasing a new office simply because of the prestige we may feel from making that purchase.
By being willing to determine our needs based on their value rather than their price, we can surround ourselves with the things that enhance our ability to achieve success. Opting for the lowest bidder or the cheapest price may increase short-term cash flow, but the benefit of pricing value instead of cost will equal less money spent in the long run.
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