Squeezing the last drop....

ianmr65

Most organisations, when they buy things use a variety of teqniques to make sure they are squeezing maximum value from every pound they pay out.

They go by fancy names like:

Cost Benefit Analysis.
Value Engineering.
Whole life Costing.
Process re-enginering

And apply them to the things they buy, and sell, and people they employ, and to try to help ensure that they make as much money as possible..... However their deepest hope and expectation is that ordinary consumers like you and me won't behave like that. That we won't look at value, or try to squeeze the last drop.

Even polititans are at it: I remember when Ken Livingstone got in and said

"I hope more people will leave their car's at home and use public transport"

Let's just hold it there a second : and examine the idiocy of that statement.
I have a car. It cost a lot to buy. It costs a lot to tax, insure & maintain. It will lose value over time. These costs are pretty much fixed, and I will have to pay them wether i use it every day or just once a week.

So if i leave it at home and pay to use public transport. I'm still paying all those costs, as well as the cost of the public transport. Well I thought then, and still think now : Ken Livingstone is talking rubbish.
If he left all his shiny new Buses in the garage, instead of using them all day and everyday..... he'd be loseing shedloads, and would have been out on his ear a long time ago.

Now if he'd said. 'Sell your car, use public transport" I'd have had a lot more respect. But if he'd said that, then the car makers, petrol companies, and the treasury would have been on his back from all that lost revenue.

So how do you make sure you are squeezing the last drop.

Well before you decide wether to buy or sign up to anything, ask yourself these questions?

How much will this cost to buy?
Can i get it any cheaper?
How long is the warrenty?
How much will this cost to run?
How long can i expect this to last for?
How much will this cost to repair?
What am I going to get out of owning this?
Will it have any value after i'm finished with it?
Can i sell it when i'm done with it?.

Let's look at a few examples:

A can of beans.
Buy a can cheapest from aldi at 7p. And heat it up for about a 1P. It will feed me for a morning. I can wash the can out. Decorate it, and use it a pencil stand. And might even be able to sell it, and make a profit.

A DVD - Say the Bourne Ultimatum
Buy it from play.com at £6.98 no p & p. Watch it once. Keep it for 3 months.
Watch it again. See it's now on sky. Try to sell it on ebay. Fail. Lose my e-bay fee's 50p. Give it away to a charity shop when i'm having a clear out in 5 years.

A Netgear Rangemax Broadband Router
Buy it from ebay re-conditioned, customer return, for £59.99. PC world price for a new one £139.99. Use it to give all the computers, laptops and xboxes in the house broadband access. Keep all the packaging. Use it all day and every day for 2 -3 years. Sell it second hand in box, on e-bay for £30-£40.


These are just examples. YOU CAN SQUEEZE THE LAST DROP out of anything, House, Car, Mobile phone, Broadband connection, Food, clothes, electricals, holidays, Gym memeberships................

Ah ha I hear you cry, 'gym memberships, waste of money!!'

Well they are if you go once a month. As each work out is costing you £60.
If you go every day, get fit, healthy, and relaxed. Shower there, instead of at home. Use the gym cafe as a place to meet business clients, and get a deal on their meeting rooms. And take advantage of all their freebies, it can work out amazing value. All for less than £2 a day.


So remember think long and hard before you hand over your cash.
And ask yourself these questions, and work out the answers FIRST!!

How much will this cost to buy?
Can i get it any cheaper?
How long is the warrenty?
How much will this cost to run?
How long can i expect this to last for?
How much will this cost to repair?
What am I going to get out of owning this?
Will it have any value after i'm finished with it?
Can i sell it when i'm done with it?.


Good Luck fellow squeezers!!

ianmr65

Forget to say if anyone wants more technical details, about how to do this, just drop me a message, or ask on this thread.

moonrakermagpie

And your point is................

Zazen999

I believe a fellow called Martin got there a few years before you...

ianmr65

moonrakermagpie wrote: »

And your point is................

My point is that using these sort of techniques, which in a simple form i have explained above can save you a great deal more money than just trying to find the savings, and benefit's as described on this site. There are loads and loads of advanced tools that you can use that flow from these basics:

Cost Benefit with Risk Analysis

Value Engineering.

Whole life Costing.

Process re-enginering

Purchase Process Analysis

Negotiation Planning

Sourcing Strategies




And here is a bit more detail on the first one


Cost Benefit with Risk Analysis


1) Define, or breakdown the purchase into its elements by drawing up list of inputs, outputs, activities and events.

2) Calculate, research or estimate the cost and benefit associated with each element. (Include if possible direct & indirect costs and benefits)

3) Compare the sum of the costs with the sum of the benefits

4) Rank the elements into a hierarchy that reflects potential success / failure on the whole process. If the variation in the potential impact of the ranked elements is significant, then:

5) Assign weighting values to each element.

6) Estimate the likelihood of success or failure of each element.

7) Multiply the likelihood of success or failure for each element by its weighting value.

8) Compare the risk (result of 7) with the costs and benefits associated with the results of 3

ianmr65

Zazen999 wrote: »

I believe a fellow called Martin got there a few years before you...

Erm no he didn't.

Businesses have been doing this for 40-50 years, and I for one have been doing this at work, and at home since I started work: for about 20 years. Saving the companies I work(ed) for tens of millions of pounds:

And squeezed a massive amount of value, and saved a hell of a lot of money in my private life, using exactly the same techniques.

I just didn't launch an excellent website about the basic elements of cost saving & money management, also I'm not a journalist, which Martin is.

ali1972

Mind you, I sometimes give books and DVDs to charity shops and don't consider it a waste. I even use my giftaid card to benefit the charity more. I also buy my books from the Oxfam charity shop.

geordie_joe

I bought 12 cans of Fosters this morning. I applied your techniques and it made no difference.

Inputs = Lager (Large quantity)
Output = P*ss (Even larger quantity)
Result = Head ache in the morning.

Do I really need to buy this? Oh Yes.

ianmr65

geordie_joe wrote: »

I bought 12 cans of Fosters this morning. I applied your techniques and it made no difference.

Inputs = Lager (Large quantity)
Output = P*ss (Even larger quantity)
Result = Head ache in the morning.

Do I really need to buy this? Oh Yes.

:beer: :beer:
Input = say you got 6 litres fosters larger from the offi - at £9

You could have got 2 litres fosters for £3, and another 4 litres of aldi bottled, lager for say £4, as you wouldn't have been tasting it by then + some ibuprofen tablets, and an energy drink for the morning, and still spent less.

Output = garden / house plant fertilzer

Result = not such a bad headache in the morning

ianmr65

ali1972 wrote: »

Mind you, I sometimes give books and DVDs to charity shops and don't consider it a waste. I even use my giftaid card to benefit the charity more. I also buy my books from the Oxfam charity shop.

There'e def nothing wrong with givin stuff away to the charity shop. It's much better than chucking it out. I've got rid of lots of books, and old clothes that way.
But have you seen the amount of people trying to sell cds and dvds on ebay

The point i'm making is that if you buy something that no one is likely to ever want, it does not have as much value, as buying something that people will want.
So how much you are willing to pay should depend on how much a thing costs and how much it's value in cash will be after you don't want it anymore.

ali1972

ianmr65 wrote: »

There'e def nothing wrong with givin stuff away to the charity shop. It's much better than chucking it out. I've got rid of lots of books, and old clothes that way.
But have you seen the amount of people trying to sell cds and dvds on ebay

Absolutely. Before the days of ebay, most of those books, cds and dvds went to the charity shops and the jumble sales by default. Nowadays everybody wants something in return for their unwanted items. And how many people use their libraries instead in the first place? In my circle of peers I seem to be the only one. It amazes me - I've paid my council tax, I'm jolly well getting my reading material for free!