Stockholm is not Stockton

What didn’t you understand of, “You get what you pay for.”?

My original analogy, well, it wasn’t even mine, was someone, let’s say, a start-up founder, walks into a BMW dealership and asks for a BMW. But he wants to pay the price of a Hyundai. The BMW dealer looks a little perplexed and probably would never say something like, “Hmm, maybe you should go down to the Hyundai dealership.” He could also say something like, “OK, let’s analyze this, what part of the car can you do without? Hmm, if we want to cut down the price in, say, half, what if we just took out the interior? Or maybe the engine. How about a used model?”

“But I want a BMW,” says the start-up founder.

“Maybe you should save some more money and come back when you can pay for it.”

Or maybe get a Hyundai now and later you can get a BMW. Or get a used BMW. But how can you expect to get something that’s worth more for the same price as something that’s less?

But it’s just time, it’s not a car or a city!

Of course, this all gets more difficult when we’re talking about a service. It’s hard to put a dollar value on a service. It’s often just someone’s time. What does that really cost anyway, right? It doesn’t really “cost” me anything to sit here for an hour and think up names for a new start-up. Or does it? It’s opportunity cost. I could be doing that work for a paying client. Or a client that values the difference between a BMW and a Hyundai. Or between Stockholm and Stockton.