The Difference Between
Price and Cost
Simply
put, Price is what is paid for a one time
transaction. Cost is everything that is
involved over the course of time.
We see this in several areas of life. Take
clothing, a wedding dress for example. The
price tag dedicates the Price of the dress.
Cost includes the time, stress, and bonding
between mother and daughter, involved in
finding the “perfect dress.” There may be
several trips to different dress shops, and
to bridal fairs, the reading of bridal
magazines, the searching of web sites, and
asking friends. The biggest Cost is how the
bride feels on her wedding day. If she feels
beautiful, special, and good about the
dress, the Cost is very low. But, if she
feels poorly, it makes no difference what
the Price of the dress was, the Cost is too
high.
Which is the
better deal?
Another example
of price vs. cost could be front brake pad
replacement, on your vehicle. Let’s consider
the work being done at two different shops.
-
Shop
1, quotes the job at $145.00
-
Shop 2,
quotes the job at $170.00
If we look at
price alone, the quote from Shop 1
is the least expensive, so it looks like the
best deal. But, let’s look a little deeper and
consider the cost. The brakes Shop 1 put on last
30,000 miles. Shop 2 is using better quality
brake pads; they will last for 45,000 miles.
Over the course of 90,000 miles you would have
spent $435.00 (3 brake jobs x $145.00) using
Shop 1 and only $340.00 (2 brake jobs x $170.00)
using Shop 2. This alone is a dollar savings of
$95.00.
Some other costs to consider are that the cheap
brake pads squeal every time the brakes are
used, kind of annoying. There is the
inconvenience of the vehicle being in the shop,
one extra time, to get that extra brake job.
There is also a safety factor involved; the
inexpensive brakes do not work as well, so it
takes a longer distance to stop.
Clearly, using better quality parts, even if it
makes for a higher price, gives a lower over all
cost, less stress, less inconvenience, and a
safer vehicle, isn’t this what we really want?
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