Little Glossary · Go-to-market
Opportunity cost
Opportunity cost is the value of the best alternative you give up when you choose one option. It isn't what you pay, but what you miss out on by putting time, money or people into something else.
Where it comes from
It's one of the basic concepts in economics: because resources are limited, choosing one thing always means giving up another. The term is attributed to the Austrian economist Friedrich von Wieser, although the idea is older.
How it applies in a B2B company
The typical case is a team taking on work outside its core competency:
- Product engineers spending weeks rebuilding the corporate website instead of moving the roadmap forward.
- The marketing lead designing every deck, banner or one-off piece herself instead of working on strategy, channels or acquisition.
- Founders reviewing every visual detail when they should be selling or talking to customers.
How to estimate it
It has two parts:
- The visible part: hours spent multiplied by that person's cost per hour. It's easy to calculate and usually understates the problem.
- The real part: the value of what didn't get done in that time. A feature that ships a quarter late, a campaign that never launched or a round of customer interviews that got postponed.
A hypothetical example: if an engineer spends a month on the website, the visible cost is that month's salary. The real cost is what they would have contributed to the product that month, and that depends on what was waiting on the roadmap.
How to use it to decide
- Compare against the best alternative, not against doing nothing.
- Assess impact using business KPIs, not just hours.
- Outsource non-core work when the person doing it is more valuable elsewhere.
Related terms
Sources
- Wikipedia, Opportunity cost.
- Wikipedia, Core competency.
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