A $20 Toilet and the Hidden Costs of Doing Business

I assisted a loved-one today with a move. This person is between places, so most everything is going into storage until a suitable place can be found. I spent several hours, in the company of a few others, loading trailers, driving to the storage unit, and unloading trailers. What was unusual about this move was the stuff we were moving. We transferred everything from building materials to old lawn chairs. I even moved four (not one, not two, not three… but FOUR) blow up killer whale pool toys still in the box! Can you say PACK RAT?
Appraisal CostThroughout the process, the owner of such junk constantly said things such as, “You will never believe the great deal I got on this,” or “Someday I am going to install this if I find the right house to fit it.” Yeah. It was one of those days. I was grateful to be able to provide some service, but discouraged that we were spending a lot of time moving items that—quite possibly—will never, ever be used again. But, they were cheap, right?
Because we live in such a materialistic society, we tend to judge the cost of everything in dollars and cents. However, we really should stop to consider the other costs involved—especially as business owners. Let’ break this down by using just one item from the move today… a toilet (I actually moved three of them today, but we will stick with just one). As I was hefting one of the commodes (yes, I am that tough), the owner said, “That was a $350 toilet, but it was on clearance for $20 if you can believe that. How can I pass up a deal like that?” How indeed. Let’s consider the cost of a $20 toilet. From what I can gather, the toilet in question was purchased about a decade ago. First, there was the mental cost of deciding whether or not to buy the $20 toilet. I doubt this was too expensive as it appears the decision was made quickly. Next, there was the $20 spent on the toilet. I will assume it was purchased with cash and there was no interest added for putting it on a credit card. Next, there is the cost of time and physical effort to load it in the vehicle, take it to their place of residence, and find a place to store it. Then comes the stress of the mess it is sitting in and contributing to. Social scientists have measured a correlation between accumulating a lot of stuff and well-being. Let’s just say it is not exactly healthy to be a candidate for A&E’s Hoarders. Now, we are moving the toilet to a storage unit. There is the monthly cost of the unit and it will eventually need to be moved again to the new place of residence. Most likely (I know I am going out on a limb here), this toilet will never even be used. So, what is the true cost of a $20 toilet?
As business owners, we must also consider the costs involved in the decisions we make. Take hiring a new employee, for example. Remember that it is much more than just payroll we need to consider. We must factor into the decision the cost of finding, hiring, and training. What kind of employee will this be? Will they catch on quickly, or need retraining on a regular basis? Will they be prompt or continually late? Will they be able to focus and get the tasks assigned done or will they constantly get distracted and bring their family and personal problems to work? Will this employee be helpful to the vision of the company or is the cost just too high?
What about that new piece of equipment. It may be shiny. The price might be right, but do you really need it? Have you considered the cost of your time to learn a new gadget? What about the cost of the space it will take up? Will there be repairs needed? Remember, repairs are more than just the check you write to the Maytag Repair Man.
We have not yet even talked about the principle of opportunity cost (lost opportunities when you make one choice over something else you could have had), but that is also something to consider. Of course, one can start to become overwhelmed by the number of costs involved in every one of our decisions. That is not healthy either. My point is not to add to your stress. My point is only to remind us all, as successful business owners, that there is more to consider than just the price tag.

5 thoughts on “A $20 Toilet and the Hidden Costs of Doing Business”

  1. Pingback: A $20 Toilet and the Hidden Costs of Doing Business - Appraisal Buzz

  2. I couldn’t agree more, I have a cousin who spent $250 a month for two years storing about $600 worth of household stuff none of which had any sentimental value . I tried twice to explaining to him how crazy this was but it fell on deaf ears.

  3. This post comes at a time when it is time to renew my software package. I use alamode and every year they seem to find a way deeper into my wallet. The last couple of years have been the Mercury Network and now after they have sold the Mercury, their Total Connect; both are portal/delivery type fees. They want $250 a year for Total Connect and then Mercury still charges its own separate fee. I love (hate) how they always price things at the cost something equal to a single assignment. I have for years complained to myself and others and every year (this one included) have renewed my subscriptions, despite the cost above what I could probably find elsewhere. This is because there is always a certain cost in learning a new software system. The truth is I have a love/hate relationship with alamode. They provide the best software and service, but also charge as much as they can get away with. Kudos to their brilliant capitalist business model for sure.

    The same concept applies to high tech for me. I know the coach and many others love high tech appraisal. I just cant get over spending hundreds up front, then again every time the software or hardware changes and then again on the time spent learning new systems. My pencil is cheap and never needs an upgrade, only a 10 cent replacement every so often. I am not saying there may not come a time when I give up the old way, just saying for now I cant crunch the numbers to my advantage. Maybe if the voice programming was figured out I would be on board with giving up my pencil.

    But back to expenses. I don’t know about the rest of you, but the portal fees are getting old. If ever there was an industry that allowed itself to be taken advantage of, its us. By virtue of who we are and why we get hired in the first place (independent), the same virtue allows us to be easy targets for skimmer industries (industries that scrape away at producers as their source of income). I find that frustrating. I have spoken to so many appraisers who are anti-union when in fact, our industry is in great need of one. The NAR would never have allowed HVCC or Dodd Frank to pass as they did (which is why I do not contribute to the RPAC anymore).

    Anyways, good post. Need and want. Too many folks get these mixed up.

  4. The office I work at where I am the Office Manager (Not receptionist as you had recommended hiring in a previous blog) has 4 appraisers. I have had to deal with them clinging on to older slower methods and slowly get them use to some new technologies. I thought the world was going to end when I told them that this year, XP will not be our operating system. We are still using the older Aurora and I am fine with that because Total still needs to develop more. But when that day comes for the Appraisers to move up to Total…. Shiver! I also wanted to respond to what “M” said about the Mercury per appraisal fee charge I think “M” was talking about. I have several sites that require payments per order and they range from $5 ~$18. We have yet to pay for a single Tech, Upload Fee, or whatever else they want to call this shovel pass play for money (Sorry, almost football season). When I get clients that try and charge this fee without adding the fee into our fee, I conditionally accept the order and add a fee of $50. I usually get a phone call asking why the added fee and I tell them it is because of the Tech or whatever fee they are charging, we do not pay those fees should already be in your business model, just like our MLS, Insurance, Continual Ed, and having an awesome Office Manager, is built into our Fee models we charge our clients. When they ask why the additional fee is higher than the service charge, I tell them it was for the time it took me away from other tasks to explain it. We have not had a single client turn us down due to adding the service charge into our fee and all of them paid the additional $50 add on fee when they first requested we pay a charge. Only a couple of companies have tried to push the fee on us after this, every time I conditionally decline and add +$50 and every time they have added the $50 and the list of clients not pay the charge grows smaller and smaller. I have built up our base of clients from 6-10 main clients 5yrs ago, to almost 40 main clients (main as in steady order requests). Our full client list is 146 clients. I have worked hard to find good paying clients and even if the majority of them do not provide steady work, the wide base give us a steady work flow all year long. This could be a topic all on it’s own. Sorry for the mission creep. Keep on, Keeping on!

  5. Does this mean the end is near? Am I going to have to give up my Big Chief tablet and #1 pencil? Seriously, we have the same issues here with the alamode money sucking machine (have been an alamode user since Dave Biggers was selling the old DOS version at trade shows, trying to get appraisers to START using computers instead of typing reports). I echo the comments of ‘M’ and ‘Dan’. After 42 years in this crazy business (thought I would be retired by now, but economy took care of that) I have seen lots of changes; some good, but mostly not. Guess we all must just “keep on, keeping on” as Dan said.
    Thanks for the good article!
    BTW, I really NEED the 3 old computers and 4 CRT monitors, along with tons of other ‘essential’ items I have in my rented storeroom, so gimme a break!

Leave a Comment

Your email address will not be published. Required fields are marked *

Related Posts

Scroll to Top

Existing Members

If you have been a member prior to Jan. 1st 2024

Or, click on the right side to sign up as a new member (with a free month and added bonus material) and your existing membership will be automatically moved over and any extra payments credited. 

Or, click on the link below to sign up as a new member (with a free month and added bonus material) and your existing membership will be automatically moved over and any extra payments credited. 

New Members

If you became a member after Jan. 1st 2024 or are an existing member and want to move to our new system. 

Try the All-Star Team No-Risk for 30 Days Free!