Total Cost of Ownership (Shop Local vs. Online)

It is the time of year when people are looking for that gift for someone special. Generally, our buying practices increase substantially around now in the rush up to Christmas. In the current climate we need to ensure that we maximise the value we get for our hard earned cash.

With the increase of on-line stores, we have access to a greater choice of sellers for our products and a greater range of prices. Our High Street has become global and entered our homes through the PC. The result is that people will tend to buy on-line if they see the product they want available for a lower price than, say a local store.

Unfortunately, many people fall into a trap; they fail to consider the TOTAL COST of OWNERSHIP (TCO). The TCO takes into consideration all costs that are not included in the base price of the product you seek, but which need to be paid before you can receive the product. It includes things like Delivery Charges, Insurance, Currency Costs, Fuel Costs, etc.

We see the price of a product in our local stores and then compare it with an online price for the same product. In many cases, the price online might be lower. This drives our buying decision. But we fail to consider (or include) the fact that the product we are buying is quoted in ‘$’ or ‘£’ or another currency and there is either a conversion charge or the cost of currency is more expensive (e.g. buying in Sterling (£) from Euro (€)). We forget that there is a delivery/postal/courier charge that will be added to the price of the product. This may also be affected by a currency cost. Depending on the product you are buying, there may be an additional requirement for insurance which will also be added to the cost of your product. Once you add all of these costs up, you may find that the local price is not as expensive as you first thought.

What about traveling to another country to buy your product. In Ireland there is the huge temptation to travel across the border to Northern Ireland where products are cheaper. However, ask yourself, would you have traveled to the North if you were not looking for the product. If your answer is no, then, you should add the cost of fuel to your product as it is not money you would have spent at that time or making that trip. Again, this affects the true price you would have paid.

I am not for a second suggesting that you HAVE TO buy what you want from local suppliers. I am merely asking that you consider ALL of the costs, before making a final decision on where you should make your purchase. Forgetting to consider the TCO can result in you paying more than you expect for products and deluding yourself into thinking you have picked up a bargain (until the credit card bill arrives, that is).

Enjoy shopping, shop safe and don’t forget the TCO…

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