Cost and Price are not Interchangeable

In every day speaking, there is often confusion in the understanding of the difference between price and cost. What is the difference between cost and price?

According to the Oxford English dictionary, price is the amount of money expected, required or given in payment for something, while cost is the total spent to acquire a good or a service including money, time and labor. By definition, cost is the sum of all the resources, including but not limited to monetary resources, spent to possess a good or to receive a service.

Although cost is the most accurate indicator of what we need to give up to acquire a good or service, most of the time we find ourselves focused on the price. We focus on price because it can explicitly tell what we need to give up; 20$, 100 € or 50£. To have a clear understanding of real cost may require complicated tracking and assessments since it does not only require the monetary calculations but also time, labor, opportunity and risk related calculations.

For instance, to buy a can of soup all we need could be looking at the price tag and not worry about time, labor, opportunity and risk involved with purchasing a specific brand versus another. For businesses, on the other hand, to implement successful cost management process and procurement strategies could be the key to gain competitive advantage.

What is the cost of Web Conferencing?

If you pay x amount of dollars to your web conferencing vendor, it means the price, not the cost, is $x. So, how about the cost? Well, we said cost also includes time, labor and risk. Time in web conferencing could mean software installations prior to the meetings or trainings on how to use the meeting platform. Labor could mean how deeply the IT department should be involved. And risk could mean delivering less interactive and less engaging presentations due to the technical limitations of the web conferencing platform.

You may know the price of your web conferencing but do you really know the cost of your web conferencing?