Simply put, opportunity cost is the value of what you give up when you choose to do something else.
Let’s set a few assumptions. Say you have a brilliant employee (let’s call her Liz) who is a programmer and is fluent in English and French, and works at your company in the US. Say you decide to conduct a marketing campaign to promote your product, and say you considered penetrating the European market, starting with France.
No problems so far. Your Marcom team produced an amazing marketing campaign and you’re good to go in the US.
You thought ahead and employed a translation agency to translate and localize the materials for France, and you decided to hand the French proofreading task to your lovely native French speaking programmer, who is NOT a professional editor or language expert, even though she masters both English and French, and is extremely knowledgeable about the company. You give Liz the task because you think it will cost you less than giving it to a professional editor/proofreader.
The scene is set, now let’s check how opportune this opportunity cost really is . . .
While it’s true that you don’t pay for the editor’s work directly, you actually bear the following costs when you let willing (or not) Liz undertake the task:
- The time she is not working as the capable and highly paid programmer that she is. A quick Google search will show that a professional translator earns far less than a skilled programmer.
- The cost of her not being a professional editor will surface either in her slower speed, lower quality of work and possibly in actual mistakes for lack of knowledge. These are all issues that don’t tend to come up when you let a professional handle the work.
- The cost of “round II” (by a professional proofreader this time), after you realize you should have taken this route from the start.
- The cost of a frustrated employee, by no real fault of her own, which is bad for the working environment.
In its explanation of Opportunity Cost, Investopedia gives two examples and says:
In both cases, a choice between two options must be made. It would be an easy decision if you knew the end outcome; however, the risk that you could achieve greater “benefits” (be they monetary or otherwise) with another option is the opportunity cost.
So, if opportunity cost in language-related services poses a known and avoidable risk, why not take the safe, cost efficient and all around sensible approach of using professionals from project start to finish?
Our Project Managers will be happy to take your call and offer you the best offer for your needs.