Joe’s is going out of business. They’ve been one of my favorite sporting goods retailers for years, so obviously, I’m a little upset. Every few days I go back to the store near my house as they’re liquidating merchandise to see if there’s anything new I can pick up. As a matter of fact, they have a smoker I’ve wanted for quite some time. The issue is: it’s regularly over $100 and only 10% off for the sale. So I haven’t bought it. Yet.
My brother pointed out something vital in my quest for a new, stainless steel smoker, though – I’m lazy. It’s a stainless steel box with a few racks in it. Nothing fancy, nothing spectacular. He did a little pencil work and discovered that I could build my own for about $30. So why spend the extra $60-$70? Because I’m too lazy to go out, buy the materials, and put it together myself.
He had a point. And I’ve started looking at all of my purchases that way. The $5 oat nut bread I buy at the grocery store I can make at home for less than $1. The new $20 DVD I can borrow from my brother for free. The $100 smoker I can build for $30. The $800 repair on my car I can do with the help of a friend for $60 in parts.
Do I always turn to the alternative? No, not always. There are situations where the opportunity cost or risk of making a more costly mistake sometimes outweigh the savings of doing it myself. I’ll take my car to a mechanic, but I don’t blink twice when I ask my brother to borrow a movie. The issue here isn’t whether or not I can save money, though, it’s what my motivation is to not save money.
In the case of the car, I could have damaged it further by doing things myself and created an additional $1k of repairs on top of the existing $800. So I took it to a mechanic. I enjoy baking, so spending an hour or so making dough is more refreshing than taxing – and I save $4 a week by doing it myself.
The smoker, though, was a given in my mind. Joe’s has it, I want it, I should pay them for it. I didn’t even stop to think that I could do it on my own for less (and probably create a superior product).
How often do we make this decision in business. Should we outsource this project or do it in-house? How many resources are expended (man hours versus cash) in both situation? What would our schedule be if we developed the software internally versus farming out the operation? What is your decision making process?
Basically, how lazy is your business?
Great post with good reminders!
I think maybe you’re being a little hard on yourself. Your calculation of the cost of building the smoker is missing the most important component: the value of your time and effort.
Perhaps rather than being lazy, you are unconsciously including the cost of your time/effort, the value of which may exceed $60-$70, making Joe’s smoker a relative bargain.
What would likely tip the scale in favor of build-your-own is the gratification of building your own. In the absence of enough such gratification, in the presence of the full value of your time, economy generally favors making the purchase. That’s why more people live in cities these days, rather than on self-sufficient farms.