How to identify good costs

For people who own a budget, the challenge is to do more with what you have.

“We’re giving it all we have. We need more budget.”

How can a budget owner (and their team) unlock value so as to free up scarce resources?

Understanding the difference between good costs and bad costs is a good place to start.

Is there such a thing as a good cost?

Marcin Floryan, the Technology Lead at Spotify, summed it up beautifully when he said:

"Spending is fine, wasting is not"

Another way to think about it is:

Good costs create value.

Bad costs create waste (which reduces value).

And you can start to identify your good and bad costs by asking one simple question:

“What did we get from the money we spent?”

PS: not all value is easily quantified, e.g. Customer Service. Just because you can’t quantify it, doesn’t mean it won’t have an impact in the near future.

One sporting stat

Last weekend saw Adelaide host the final round of the Supercars championship, with Brodie Kostecki claiming the overall championship title.

In 2022, it is estimated that the event generated over $50 million for the South Australian economy. Just over 258,000 people attended the 4-day event, including an estimated 12,000 people from interstate.