Out of the Box Solutions Blog

Why You Need to Know the Difference Between “Value” and “Cost”

Why You Need to Know the Difference Between “Value” and “Cost”

There’s no denying that the numbers on an IT invoice can be intimidating, to say the least. However, when making important decisions about your IT, you need to also look deeper than the numbers, to what you are actually going to gain by making one investment over another. This is the difference between comparing cost and comparing value.

Analyzing Cost

The word ‘cost’ is one that is familiar to most. In essence, it is what you have to give up in order to receive something else. While it is perhaps most familiar in the financial sense, cost can also refer to time, effort, or any other finite resource. By analyzing cost, you are directly focusing on how much less of one of these resources you will have, in the exchange for more of another.

Don’t get us wrong, it is important to factor in your costs as you evaluate your business’ plans. The problem comes into play when cost is the only factor that is considered, as cost only tells half of the story.

By its nature, analyzing cost strictly focuses on what you lose. What resources will you be sacrificing to do this? How much money will doing that put you back? What will you be unable to do if you take this course of action?

In order to properly make a fully informed business decision (or any decision, for that matter), you have to also consider the other half of the story as well: that decision’s inherent value.

Analyzing Value
Counter to the analysis of costs, analyzing the value that a decision will bring you can help you determine what you gain. While again, it is perhaps most often seen in the financial sense (“Is this purchase worth it?”), value can take many different forms. Sometimes, making a particular decision will boost your standing with a prospective client, or will open you up to more opportunities down the line.

So, rather than focusing on what a new workstation will cost you financially, compare that cost to the potential benefits that the new and improved workstation will be able to bring to your business. Will it increase your productivity? Will you have access to improved solutions that ultimately translate into improved employee satisfaction, and therefore, greater talent retention? Will you be able to better serve your market, fostering loyalty in new and existing clients?

Calculating Your IT’s Value
In order to establish how much value a certain endeavor or initiative has brought your company, it helps to compare it mathematically. Not only will this help you to track what you have invested into a given initiative, it will also help you to calculate the optimal outlay for maximum value.

To calculate this, it may take a little trial-and-error, with some simple tracking of the results. Using a simple “x=y” equation, insert your invested cost for “x” and the result for “y.”

Let’s assume you’re determining how much time to spend on a particular initiative. If, for example, you figure out that your investment into your technology increases productivity, you can track the ratio of productivity-to-investment until the benefit tops out and starts to fall again. Let’s further assume that you observe that investing $25 extra into a workstation increases productivity by 10% and investing $30 extra will increase it by 17%. If investing $31 only increases productivity by 16%, you’ll be able to narrow down your optimal spend to between $25 and $30, maximizing your value.

Out of the Box Solutions can offer you the solutions that can provide you with maximum value. Reach out to us at 800-750-4OBS (4627) for more information.

Tech Term of the Week: Blockchain
What to Do With Your Old Power Converters, Accordi...
 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Tuesday, January 22 2019

Captcha Image

Mobile? Grab this Article!

Qr Code

Tag Cloud

Tip of the Week Security Best Practices Technology Business Computing Network Security User Tips Tech Term Privacy Productivity Internet Smartphones Efficiency Cybersecurity Hardware Mobile Device Browser Microsoft Android Communication Malware Ransomware Email Network Small Business IT Support Cloud Data Collaboration Managed IT services Innovation Data Backup Google Passwords Windows 10 Wi-Fi Mobile Devices Data recovery Internet of Things IT Services Communications Applications Wireless Holiday Users Backup Saving Money Business Management Business Intelligence Employer-Employee Relationship Blockchain Hosted Solutions VoIp Software Marketing Information Networking Business Hackers Outsourced IT Workplace Tips Social Media Managed IT Services Cloud Computing Managed Service Mobility Wireless Charging Cortana Compliance Virtualization VPN BDR Gmail Data Management Remote Monitoring and Management Computers Save Money Tech Terms Access Control Microsoft Office Automation Managed IT Service Connectivity Medical IT Remote Computing Smartphone Patch Management Facebook Artificial Intelligence Computer Apps Cost Management Analytics Bandwidth Virtual Assistant Password Twitter Telecommuting Authorization Digital Data loss Router Vulnerability Machine Learning Database Voice over Internet Protocol Knowledge Office 365 Plug-In Wireless Internet Online Shopping Streaming Media Tip of the week Environment Phishing Update Government PowerPoint Content Filtering GDPR Data Security Inventory Unified Communications Spam Websites Internet Explorer Comparison Training IT Management Touchscreen Spyware Cybercrime Telephony Proactive IT Help Desk Backup and Disaster Recovery Downloads User Tip WannaCry Server Management e-waste G Suite Data Breach Outlook Big Data Sports Data Protection RAM Workers Edge Virus Safety Threat Specifications Security Cameras Server Microsoft Office 365 HP Tactics Voice over IP Business Continuity Settings Hard Drives Trends HIPAA disposal Bring Your Own Device Sales Profitability Gadgets Storage Mobile Security Microsoft Teams Millennials Miscellaneous Antivirus Printing Reporting Word Document Management Telecommute Upgrade IT budget SSD A.I. Dark Web Hard Drive Value Hybrid Cloud Tablet Amazon Eliminating Downtime Physical Security Operating System Company Culture Business Technology Staff Dongle Paper Conferencing Wearables Lead Generation Network Attached Storage Movies Authentication Paperless Office Maintenance Analysis Certification Battery Error Processors Cables Excel BYOD eCommerce Laptop Technology Tips Managing Stress Troubleshooting Ink Office SaaS Healthcare Quick Tips Personal Information Disaster Recovery Regulation Alert Printers