Know The Rules Of Opportunity Cost
Opportunity cost is the cost of pursuing one choice instead of another.
Most freelancers are working on a variety of different projects at any given time and are constantly facing a decision between different options, and choosing which projects to take and which ones to pass up can be a daunting challenge.
Most of us typically make these decisions based on factors like the amount of money that can be made, the time the job will require, and our current availability. Obviously, these decisions aren’t always easy.
While the factors of money, time and availability will be major influences on any decision that you make, they don’t always tell the whole story. If you were to pass on a particular job, what would you be able to do with your time, and how would it affect your overall situation? Opportunity cost allows us to see the complete picture.
As a freelancer, you will be constantly passing up on something in order to take a specific job, whether you realize it or not. If you were to turn down the job, what else could you be doing with your time? Pursuing higher-paying jobs? Taking a job that would give you some great experience and new skills? Different types of work that you enjoy more? Continuing education that will improve your abilities? Spending time with family? Actually getting a full night of sleep?
Because opportunity cost involves much more than just financial numbers it is clearly not a black and white exercise. You’ll have to make some educated guesses and it will force you to explore things that you might not otherwise consider. The goal of determining the opportunity cost of taking a particular job is simply to help you to better understand the broad scope of your career and your life, and to make decisions that will put you in the best possible position.
The next time you’re faced with the decision of whether to accept or decline work, take a few moments to think about the opportunity cost that is involved. It can be a very helpful habit to develop for evaluating the costs and benefits of your options. You’ll see that your work becomes more profitable and productive and your life will be more enjoyable if you base your decisions on the big picture.
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