Dear Readers,
On errands this weekend to fill my home office, I ended up at the television store.
As I browsed through LGs, Samsungs, and the rare Toshiba, the concept of opportunity cost crossed my mind.
Was I spending my money wisely? Was there a better option? I had actually been thinking of buying Lead Player to help my blogging videos, maybe that was more worth it?
As I drifted off into day dream narnia I realized this was a bigger concept that I thought…
Opportunity cost related to blogging
Blogging is a time-consuming activity and if you do it the “right way” it costs you some money. Email list software, hosting and domains, themes, it all adds up.
Of course, to many of us these things are a necessity, a topic we’ll talk about in a second.
Here’s a simple example of opportunity cost:
Say you have two choices. Stay in tonight and setup a simple website, or go out to a dinner and play with a hot date. The first costs you $60 – that’s the cheapest route with HostGator. The latter costs you $100, cheap for NYC.
The opportunity cost of going to a play is the alternative activity, setting up a website.
The opportunity cost of going to a play is thus, a lasting website, and more importantly, $40 cash. Folks never realize that opportunity cost actually saves you, or gains you, money. You just have to analyze the situation like I just did.
More examples:
- Spend 2 hours writing a post, or 1.5 hours exercising at the gym followed by 30 minutes on a post.
- Go to Theme-Junkie for a premium theme or go to J-Crew for a premium polo.
- Spend two hours reading blogs or two hours watching television.
The key factor to realize here is personal utility. What I choose for my evening might not be the best for you and it’s all about getting the most satisfaction for yourself.
Economists really don’t stress this enough.
Understanding that other options exist and comparing them side by side can often really clear up a decision. And of course, the options should be of equal cost in terms of money or time.
Necessity
Necessity has everything to do with personal utility. It’s defined as our own view on what we need.
We’ll spend a lot for what we deem necessary and will go to great lengths to NOT spend on what we think we don’t need.
For me, three things are absolutely necessary in blogging:
- The domain name and hosting
- A premium theme (read which one)
- An email list building software (read the review)
These things cost me relatively little each money (the theme was a one-time thing) and it’s the bare minimum for me to blog how I want to.
But depending on where you’re at in blogging and website building, this may be totally different.
And, oddly enough, when bloggers or affiliate marketers tell us “you need this tool” the most common reader response is “really? No I don’t, thank you very much.”
I don’t know, I find this stuff really interesting.
TV economics
Image Caption: View from the comp. Plant still needs a name (Lorraine?)
My TV set me back a good amount of money. The time was actually a bit less, I recruited my tennis partner help set it up.
I planned to use it to watch the French Open (immediate necessity) though upon leaving my tennis partner referred me to a bootleg site where streaming the tennis works pretty darn well.
Timing…a third economic issue I suppose.
I can’t return the TV, unless I smash it then claim something crazy.
So, I’ll have to find other, more long-term purposes for it.
Your perspective?
What do you think?
Do you think that opportunity cost affects your decision making?
Let’s talk money, and more importantly blogging economics, in the comments.