Difficult Decisions: So how DO you decide?

By | June 22, 2007

Have you ever found yourself hesitating between two choices? Often, we are torn between the short term (expedient) view and the long term (visionary) view. Sometimes, the choices that we make are influenced by our assumptions.

I recently had a customer who was vacillating between these two viewpoints and I recognized a situation that I had found myself in on more than one occasion. So I’d like to share with you a post that I wrote for the customer.

“I understand that the long term view vs. the short term view is causing indecision for you. But I’d suggest that the opportunity cost of indecision is also a factor you need to take into account. If you hesitate too long, whatever decision you make, it’ll be costing you money somewhere, for sure.

However, if you are unsure of committing to a long term deal, then the sacrifice HAS to be that in the short term you WILL pay more. That is the price of your comfort.

I would suggest that taking the longterm view is more important than spending too much in the short term. So what if you decide to pay more for a few months as you try it out. If you decide to upgrade, then it’s because you found it to be appropriate, suitable and what you need. That extra initial cost will be factored in over a much longer time period.”

We all face these kinds of decisions over little and big purchases. We’re worried about paying too much for an item, so we instinctively look for the best deal. But then we see the big deal commits us to a much longer term. Naturally, we worry if we can use the product before it expires (for food), or that we can make the best of the product/service in the time available.  We are caught between the expedient and the visionary viewpoints.

How do you break the impasse? What other thought mechanism can you use to break out of the cycle?

I’ve found that it’s much better for some kinds of products, such as hosting, skype, etc. to ease myself into longer term deals and contracts, and found it saved a lot of hassle in the short term, though it cost a little more. No big deal. We can’t always sweat the little stuff, especially when the big stuff is much more important!

For such items, I think we have to establish the value of such an item or service; before we worry about short term or long term contracts. If the value isn’t clear to us at the outset, why are we considering this product at all? The difference between short term and long term pricing wouldn’t be a deal breaker here.

For example, I bought Skype IN service, but I wasn’t sure that it would really work with my PC, ISP or whatever. In fact, I had had bad experiences with both Dialpad and Net2phone reliability issues. So naturally, I was reluctant. But I understood the value of my product: I could give my parents an easy, cheaper phone number for them to call me, and that number could reach me anywhere, either through the PC or through the regular phone line.

I had two choices: pay 10 Euros for three months or 30 Euros for 12 months! What should I do? … Unproven product, but reliable company. Ok. Try the three month contract. So for an extra 10 Euros, I got to try the product. If it sucked, I saved my self trouble, 20 Euros and months of headaches. If it worked, I paid a small premium on the first 3 months contract, and found a great product!

So, I tried the product at 10 Euros. And yes it was more expensive, but that 10 Euros bought a lot more than just a service contract. And averaged over the lifetime of my purchasing, the expense became much less! So after 2 years, I only paid a small premium of 3.7%! So the longterm view was the influencer here! It was the visionary view.

Author: InvestorBlogger

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