Used in reference to something that is well worth the money spent on it
Money isn’t everything! But it helps right?
What is value for money anyways? Let’s say you purchased a contract packaging company with existing producing assets and an existing customer base. You know you need to expand and improve you production capabilities in order to grow your business.
Money is relatively tight so you decide to go shopping for second hand machinery an find a packer and a palletiser for a mere $100k, both are from reputable quality OEM’s that are still around.
You then tell your project manager that he has $0 to spend on the installation. WHAT?
After coming back to earth you realise that $0 isn’t going to cut it and decide that some further $ has to be spent, you tell your project manager to utilise internal people as much as possible and engage external contractors only when unavoidable.
Subsequently a systems integrator gets involved configuring new products for the palletiser, commissioning the machine while assisting with the resolution of all mechanical and electrical issues.
After a while and many issues resolved a $10k bill is presented to you. You almost fall off your chair thinking, how can it cost $10k when I have already paid $100k for off the shelf “plug and Play” equipment? And this does not even include my internal costs in people and resources, deliveries and mechanical costs.
Well, the fact is – it does cost this, and it is cheap too. It will also cost you another $5k for further fine tuning during actual production runs. And still further dollars to introduce new packaging patterns down the track.
Is $15K well spent money? It depends off cause on whether you view your new system as a liability or an asset.
If you have actual products to package for selling, well then surely you now own an asset not a liability, a cash cow not a dud.
Why are some companies/people so focused on the rates charged for services rather than the value they are gaining for that service?
A “Hero” accountant saves a few dollars selecting a cut throat supplier proposals for a capital expenditure projects, Once its completed and handed over to the maintenance people, the bills starts rolling in, far surpassing the initial savings, who is the hero then? It’s as if passing money from one spending bucket to another is counted as saving money!
Is $80 per hour a better price than $150 or even $500? If the $80 per hour solution uses 10 hours producing dodgy results, the $500 per hour solution takes 5 hours ensures reliability and future maintainability, which one is better value for money?
Is it really a matter of cost?
And are YOU costing yourself out of creating an asset, producing ongoing cash?