Businesses talk a lot about the cost of a product or service. Behind the talk is the concept of “value exchange”, that is, giving a benefit in exchange for a cost. We could spend $2.00 on a bus ride but fork over $12.00 for a taxi, because the value to us—convenience, comfort—is at least the difference in price. In both cases we pay to get what we want, which is to get from one place to another. What’s that about?
In a collaboration with colleagues, this paper names “bio-cost” as the human cost of getting what we want in terms of
- physical energy, or effort
- cognitive energy, or attention
- emotional energy, or stress
We can frame the benefits of any product or service in terms of the bio-cost saved or expended in getting what we want. We’re willing to pay money for that, sometimes a lot (think: business class instead of coach). Or as our colleague Michael C. Geoghegan would say in the context of understanding business value, “The money is in the bio-cost.”