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Price vs Cost – What’s the difference?

PRICE VS COST – WHAT’S THE DIFFERENCE?

Price and cost. The two are used interchangeably. “What’s my price?” “How much will it cost me?” The Merriam-Webster thesaurus lists cost as a synonym for price. They’re wrong! In the world of buying things, price and cost are not the same at all.

In the world of buying things, the price is how much money you have to pay to get a product or service. It’s the number on the price tag. Price is easy to determine and drives most people’s decisions on what to buy.

Cost, often confused with price, is a completely different subject. The cost of a product or service is the total amount of money you put out in the lifetime of the product or for the completion of the service.

SINCE EVERYONE IS ALWAYS LOOKING FOR THE BEST DEAL, WE TEND TO FOCUS TOO MUCH ON PRICE AND NOT ENOUGH ON ACTUAL COST.

Example – your daughter wants a bike for her birthday. Since she is only 8, you want to get her something decent but you don’t want to spend a lot of money. You go to a bike shop and find a bike for $250. You look at a big box store and find one that is just as bright, new, and shiny for $100. Of course, you buy the $100 bike because it looks the same and is much cheaper.

Once you give your child the bicycle, the following happens –

  • She rides it off a curb and, because it was cheaply built, bends the rim. You replace the rim, tube, and tire for $50.
  • The bike tips over and a plastic brake handle breaks off. You replace it for $10.
  • While your kid is pedaling, the cheap chain snaps. It costs you $20 for a new chain.
  • The front tire cracks from being in the sunlight and begins to leak. It costs $15 to put a new tire on the bike.
  • The bike gets left outside in the rain one night. The cheap paint peels and the bike begins to rust. You decide you’re done fixing this piece of crap.

To recap, you’ve just spent $95 making repairs to a $100 bike. You go to the bike shop and buy your daughter the $250 bike that has a 3-year warranty that would have covered all these repairs. Now you’ve spent $445 to get a $250 bike because you bought the cheapest one first.

How does this apply to you? Maybe you’ve purchased a cheap chrome grill for your truck and had it rust when all the chrome came off (I actually have done that). Maybe you used the lowest bidding up-fitter and had to hire a professional to fix their wiring mistakes. Maybe you bought the cheap “surplus” ammo and had a misfire when the buck of your life walked by. Maybe you lost a monster bass when your “value” fishing line snapped.

But it was cheap!

The moral of the story is don’t trust cheap. Your initial payment is never your actual cost of doing business. Make sure that you’re purchasing a quality product from someone you can trust.

Find a great vehicle up-fitter or aftermarket accessory shop. TigerTough dealers are people who sell great products and take care of their customers. Find someone you can trust near you.

To see how we put quality first, take a look at our literature:

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