If you can’t afford the tip, you can’t afford the meal

Life’s full of hidden costs and one of the most common is the one alluded to in our headline. Restaurants in the United States externalize their labor costs and the prices listed on a menu actually cost at least 15% more than they appear. You can rail about this all you want, but at the end of the day the person who brings you your food needs to be compensated for it, and the responsibility for that compensation rests on the shoulders of the restaurant patrons.

Not knowing this and not living up to that obligation is a big no-no, just ask anyone who’s ever worked in a restaurant.

It’s not just restaurants of course, when you get a great price on a bicycle, a lot of times that great price hinges on your willingness to put it together. Great prices abound when you’re willing to bag your own groceries at Save A Lot or assemble your own sofa at Ikea.

This is not to say that externalized costs aren’t so much a “gotcha” as they are the true cost of a bargain.

Similarly, expenditures that don’t involve any externalized costs will require you to spend more money and allow you to save your time to do something else. Time equals money, whether its yours or someone else’s. Where people run into trouble is when they expect the cost of a full-service good or service to be the same as a no-service good or service. Clearly, hiring a contractor will cost more than a DIY project.

This topic is about hard costs, not emotional costs or costs of any other kind. Where do you fall on this line of hard costs –internalized versus externalized costs? If you’re a professional do you get thrown into competition with businesses that sell DIY projects? Are you a professional whose services are sold as a value added proposition? How difficult is it for you to show your customers the value of your services?

Finally, do you behave as a consumer the way you expect your customers to? Are you willing to pay for services or do you expect low prices at the same time you expect high levels of service? That $1 bottle of shampoo costs more than you think it does. Or does it?

Now’s your chance to weigh in on an economy in transition. How do we accommodate the Ikeas and the Wal-Marts of the world while at the same time making a living? Where does price stop and value start?

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Comments (2)

[...] with them using a statement for the title instead of the normal shortened question, namely “If you can’t afford the tip, you can’t afford the meal.” They then proceeded to ask quite a few hard hitting questions on dealing with pricing, [...]

[...] world views, each exploring a theme from his/her world view. This was about exploring the theme, If you can’t afford the tip, you can’t afford the meal. To explore how others handled the theme, check them out below. I will add links as they [...]

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