Is It An Investment Or A Cost?

Photo by Ibrahim Boran on Unsplash

Is it an investment or a cost?

That seems like semantics but I think there’s a bit more to the question.

“Cost” suggests an expense to be incurred. It’s a necessary evil because you need it to keep something running. As such, when you can find something that does the same (or near equivalent) job but at a lower cost, you’ll switch. I mean, why incur any added expense?

But what this concept of cost doesn’t account for is the long term value derived i.e. if we were to incur this cost, what is the future benefit or growth or development that we’ll see? What ‘change’ do we lose out on by not incurring this cost.

That, to me, is reframing the question of cost as ‘investment’. Framing our expenses in terms of future return and change realized, is probably the more sensible and impactful move. In looking at our decisions in this way, we might be willing to spend more to derive greater impact. 

(By the way, this isn’t only about money, it can also be about time and/or other resources at our disposal.)

This reframing is useful in sales, but it’s also useful in our everyday lives. How do we spend out time? What will we put our money towards? What benefit do we want to gain - today versus tomorrow?

Are we incurring costs? Or are we making investments? 

Depending on the answer, we might decide to allocate resources quite differently.