Lost Oppor tunity Costs

I write often about the value of our time.  In my opinion, our time is priceless.  Once the minutes are gone, they’re gone.  In my industry, you will sometimes hear the expression, lost opportunity costs.  Meaning, what is the cost of what I could have been doing, technical consulting, rather than was I was doing, troubleshooting a Local Area Network (LAN) issue?  Technical consultants in my field can bill out at $225 an hour, and a LAN tech might cost $50 an hour.  If I spent three hours fixing the LAN, that would be $675 in potential services I could have billed as opposed to the cost of the LAN tech for the same amount of time for $150.  The lost opportunity costs for my time was $675.  The actual cost for the repair was $150.  Do the math however you want to, but that still adds up to a net loss to the company of $525.

Let’s say you still change the oil in your vehicle at home as opposed to having it done at the local shop.  To do it at home, you make a trip to the store for the supplies.  You then put the vehicle up on ramps.  Next, you get under the vehicle and pull the drain pan plug.  Next, you remove the filter.  You wait for the old oil to drain.  Now you replace the filter, put the new oil in the motor, and check for leaks.  If everything is good, you remove the drain pan with the old oil, back the vehicle off the ramps, put the old oil in a container, and take it to a facility that recycles old oil.  To change the oil at home, we made two trips costing us $2 in gas, and paid $20 for the new filter and oil.  Some recycle locations may even charge you to drop your old oil.  For this example, that could be another $2.  So we have $24 in hard costs invested in changing the oil at home.  Now add two hours of your time in at whatever rate you consider your time to be worth.  You will quickly see you are few $100 into the oil change at home as opposed to the 20 minutes of time plus $40 at the local shop.  What else could you have been doing instead of changing your oil?  What is your true lost opportunity cost?

What is the price of your time?