The Cost to Shop

Justin H
Jan 22, 2017
3 min read

I’m sure most people have heard of the various types of costs associated with doing business. Whether it’s fixed or variable, hard or soft, the costs add up and combine to become the sum total of operating expenses when running a company. Figuring out the hard costs, the actual output of money to cover the price of something, is easy. They have tags and receipts, you can calculate them when you reconcile your bank account. More difficult to assess are the soft costs. The manufacturing industry has made it a science to calculate the soft costs associated with producing a single widget, but for resellers, retailers and service providers, it’s a tad more difficult.

Price shopping is one of those things that everyone does personally. No one wants to pay more for the same thing they can get at another store for cheaper. It’s a little more complex when you price shop for a business though, because the simple act of shopping has a price tag associated with it: your salary and the time it takes for you to accomplish it. Businesses also have the need to price shop, but constant shopping can actually negatively affect revenues and productivity rather than save the company money as they intend. Consider this math:

Products and services shopper (as just one part of their job) makes $12.00 an hour. The average office uses anywhere between 50-75 office supply items regularly. This person is diligent and takes their task very seriously, so they shop each item to find the absolute lowest price they can. Using the low end time frame of shopping for items, they spend 2 minutes an item to find the cheapest cost, and then purchase each item from the lowest supplier. All in, if you consider that they manage to bundle items from suppliers, let’s say they source from five different possible vendors. Each checkout is 3-5 minutes and each item added to the cart is 30 seconds. 5 minutes to add 10 items to a cart in total, 3 minutes to check out, that’s 8 minutes of time for just 10 items. Multiply that by 5, and you are looking at 40 minutes of time to add items to the cart and check out, with another 100 minutes to shop your whole catalog of supplies in a week. That figure works out to being $28.00, except with employer taxes, it’s actually closer to $32.00, and then when you remember there’s an opportunity cost because while that person is shopping, they are not doing other things, that price can get pretty exorbitant.

In pure hard costs, it costs this company in the neighborhood $32.00 to shop products per month, plus whatever opportunity costs are involved. If the person shopping these products doesn’t manage to save you $32.00 plus opportunity costs, it’s actually MORE expensive to shop items than it is for you to single source your catalog of needs. That number looks fairly low, but office supplies are just one category of a business’ needs per month. There’s other product lines they may shop just as diligently, such as cleaning supplies, breakroom items, custom print work and more depending on your industry.

I am all for saving your company money, please be diligent and responsible with your investments so you can provide the best level of service to your own customers. Just don’t do so at hidden expenses.