The Hidden Costs of Bargains


As a general rule, we do not want to spend more money than we have to.  But for those of us who love a bargain, chasing the “best deal” can ultimately cost us a lot of more. I know. I have done it several times. It took a good friend to say, “Are you willing to lose a $250,000 deal over $1,500?” as I got caught in the trap of the haggling game I had created. Since then I have tried to wise up and get to the bottom line of every major purchase, construction project, or service contract. The question I try to answer is “What’s the true cost of my short cut?”


That’s not an easy one to answer. Before I can come up with the true cost of my decision, here are some variables I have to consider:

How much more of my time will this less expensive option take? In my experience, a bargain always come with extra effort, therefore, extra time. As a rule of thumb, I figure what I make per hour and account for the extra time I will have give to this project. That alone can put an end to my cheap alternative.

How much will it cost the entire company in lost productivity? Slow computers, inefficient systems, missing personnel, and crowded quarters can cost you more than paying full price for their replacements. If you are not careful you can starve the very thing that feeds you. You can “save money” to the point of losing it.

What opportunities will we lose because of the extra headache, inadequate personnel resources, and general lack of focus? That’s perhaps the most difficult question to quantify, but I see it happen often. A simple fail to follow up on a lead that could be your biggest deal ever can cost you a lot. The inability to focus on growth engines can have an organization preoccupied with the urgent but not important. You might put out the fire but you will also fail to secure the future.

What other hidden costs of any give “bargain” should we consider?

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By Maurilio Amorim


  • Mark

    So true. I tried to save money by doing some of the work on my last remodel myself and ended up spending twice the money to get it finished correctly. 

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