cost

How Much Does Social Media Cost?

One of the most frequent questions people have when talking about social media in the business is, how much is this going to cost the company? I can understand that there are several concerns for any business, like productivity, control of the company’s image, what are recurring costs, and any number of concerns. Adweek has an article titled Beware the Social Media Siren. I can’t pretend to know each and every concern, but let me address some of the main ones here.

Productivity and social media

It is an illusion that if your employees are not on social media that they are spending their time working. The get up to go to the bathroom, stop by the water cooler, to ask their co-workers what they are doing after work, in non-productive meetings, making personal phone calls, and probably even side-stepping your corporate network through their smartphones to use social media. Productivity comes in little spurts throughout the day. The rest of the day is just killing time between spurts. I propose that if you want to keep social media under control, you should probably require your employees to use it. We all know that as soon as we require something it stops being fun. Seriously, there is one case of a company that has most, if not all, employees on Twitter, check out Zappos. Obviously, they’ve taken this to an extreme; but guess what, they’re still in business. If social media were such a waste of time, wouldn’t they have stopped by now?

But we have an image to maintain

The reason why social media works in a company like Zappos is that instead of social media being an escape from the daily grind, it has a focus. Your company can use the socializing that would occur anyway to promote the business. Think about it, your employees could secretly spend time on social media, or openly do it while promoting your business. In companies where social media is forbidden, the employee does not mention, promote, or offer help people who have expressed frustration online. If you aren’t online to participate with your clients, what image does that give? They are talking about your company anyway; wouldn’t you rather resolve any problems before word gets out that your company left somebody dissatisfied?

Are there any recurring costs?

Most social media is free. Unless you are creating your own home-grown variety of community, your upfront cost is minimal. You already pay for internet, your employees have computers and mobile phones, many employees are already on social networks, and many are interested. All your company needs is the green light to sign up and go. You may want to spend a little time setting some ground rules, like no nude pics, so that everybody is clear that their online presence has a business purpose. The tools are there, you just have to use them.

When hiring social media consultants

If you aren’t sure about undertaking social media in your company, you can hire somebody to help you put a plan together. In the article I mentioned above, there is a very good case for companies not hiring out their social media presence. Social media is not a hired out campaign. There is good reason to believe that rather than hiring a marketing company for your company’s social media initiative, it is best if your company does its own social media in-house. This, of course, would save your company money and increase your understanding of what people are saying about your company directly from those who use your products and services. If you are considering the use of social media for your business, look for a consultant who will work themselves out of a job. The good guys know that once you know the ropes, you can take it from there.

Sunk Costs and Moving On

You can listen to today’s show on Blog Talk Radio.

Download

One concept you learn in business school is that of sunk costs. In case you have not been introduced to the term of a sunk cost, it is essentially an unrecoverable cost. An example of a sunk cost is the purchase of a machine that makes type A widgets, only to have the world switch to type B widgets one year later before your machine is fully depreciated. Do you keep producing type A widgets until your equipment is fully depreciated? Or, do you sell it off to the highest bidder and buy type B widget equipment?

All the money you spent on the type A widget maker is irrelevant, and a sunk cost. You should not focus on how much you’ve already spent; you need to focus on how much you stand to lose by not going to type B and how much you stand to gain by making the change.

Often, we are so preoccupied by how much time, effort, and money we put into something that we lose sight of its irrelevance. This has business, political, and even personal ramifications. Our unwillingness to write something off as a sunk cost keeps us mired in a system that does not work.

Think of how American companies were slow to innovate in manufacturing processes while Asian companies invested in state of the art equipment and business practices. Think of how politicians will not accept the failure of government programs and simply tack on more legislation to try to fix a fundamentally flawed system. Think of how many American workers put their livelihood on the hands of the local plant that may or may not be there a few years down the road.

Progress does not care how long you’ve done something, how much you spent, or how much you care about it. The economy moves on whether you want it to or not. You have to be willing to cut your losses, aka sunk costs, and move on to other things. Otherwise, you’ll have to sink with your ship.

We often see that business is slow to react to market forces. Politicians will keep a dead a dead horse standing on principle. And, we occasionally get bent on making something work that has no hope. All of this is not to say that we ought not look to the past for guidance. The point is that we should be willing to let go of those bad decisions that cannot be remedied or undone. We should occasionally look to move on towards solving our new problems rather than patching our failed solutions. Sometimes, we have to be willing to start fresh.

Computer Tech Squeeze Play

If you are providing retail computer services to the general public, you need to keep a couple of things in mind, the price floor and the price ceiling. By price floor, I mean that you have to keep in mind that you have to make money. You can’t give away your services. You have to make a living after all. By price ceiling, I mean that you have to keep in mind that your total for service and parts cannot cost anywhere near what it would cost to replace the computer altogether.

I’ve known about this problem for some time, but today it came up. So, I am taking the opportunity to write about it here. The computer is a somewhat recent eMachine model. The computer would not start. First, you check the obvious, check the plug and power cord. If those are OK, then check the power supply. Recently, I bought a power supply tester at Office Depot, which came in handy. That tested out OK. I tried a known working power supply on the computer without success. This tells me that it’s likely a fried motherboard.

I looked up the price of the replacement motherboard. eMachines does not sell it anymore. Vendors who do carry it have it priced at $269 + SH. So, we’re looking at about $300 to replace the mobo, not including service charge. So, you already have an hour diagnosing and parts shopping put into it. If the client goes ahead with the replacement, you are looking at another hour or two of service. Now, you are approaching the cost of simply replacing the computer. Most basic systems these days are good enough for the average home user. We’re not talking high-end computers.

So, what is the solution?

The best that I’ve come up with is that the client should hold on to their old computer, buy a new one, and transplant spare parts. Anything else can be put on ebay to subsidize the cost of the new computer. Toss the carcass. It’s inelegant, but effective. When it comes to the average home computers, you can only get up to about $200 comfortably before the client starts to eyeball a new PC. This does not mean that you should not provide tech services to the public. It simply means that you need to be mindful of the total cost to the client.

So, how will you make money? Well, there is the diagnosis. Then there is the hard-drive transplant and parts salvage. And, you may even be hired for a computer setup. So, don’t be afraid to suggest replacing the computer altogether if the cost of repairing is too high. A client is willing to spend a little more on a new machine than fixing up the old beater. The same thing happens with cars. Once you overhaul the engine, you might as well keep the car; you’ll never sell it for what you’ve put into it. Rather than drive an old jalopy that runs, many people prefer to replace the car altogether even if it costs more.

Some Feedback About Virtual Assistants

A while back, I wrote about my decision to take on a Virtual Assistant for a fixed monthly fee. Previously, I was paying a $10 retainer fee to GetFriday.com to have a VA available for the occasional odd job. Now, I’ve raised my subscription to $120/month for 10 hours of service. I’ll have to figure out how to best use those hours through the month.

When I wrote this, I was not expecting the responses I received on the topic. I’ve had comments from several companies that offer VA services. Some of them seem intriguing. Here is a list of those who have commented thus far:

I’ve also had visits from people who are making it work in the U.S. as VAs.

One thing that has caught my attention regarding VAs in the U.S. vs VAs in foreign countries is the idea that domestic VAs cost more on an hourly basis, but generally charge less per task because it takes them less time to perform it. World Office Support writes that foreign VAs generally take longer to perform a task than their American counterparts. It’s a penny wise, pound foolish argument. They may well have a point; but it is difficult for me to test given that American VAs earn more than I do on an hourly basis. I think we are probably talking about different markets. American VAs are targeting people with more money than time. Foreign VAs seem to be targeting those of us with little of both. I’ve got the pennies, not the pounds.

A good example of the situation has to do with shampoo. Unilever tried selling shampoo in India just like they do in other countries. For some reason, their product was not moving. However, they did notice that travel-size shampoo was selling much better. Why? Well, you do get a better deal by buying shampoo in larger quantities, but often you only have enough money for small quantities, even with the added cost. So, the market could afford shampoo in travel-size containers much better than the standard size containers.

In the end, what you should get out of this is that comes down to arbitrage. One has to be able to buy and sell the same product at a difference in price in order to make a profit. The product in my case is time. At my current rate, there is parity between what I earn at my day job and what GetFriday earns. However, there is a price differential between what I earn in my computer business and what GetFriday earns. It is better for me to use the VA for business-related tasks than personal tasks. It pays for itself, in a way. If I were to move up one tier of monthly service, then it would actually be feasible to give my VA personal assignments as well. I could not do the same with an American VA. I’d operate at a loss whether it’s 1 minute or 60. At this point, I am short on time and money. I need to leverage both. I know I won’t be successful if I am paying my VA more than I earn on an hourly basis. Doing business at a loss is both penny and pound foolish. Maybe once I’m rich I’ll be able to hire an American VA; but not now.