What’s a Lot of Money?

The other day I was talking to a someone about the amount of money their business spent on a particular transaction. This person thought the amount was high, but I didn’t. We had an interesting discussion from there.

Today, I’m curious what you think is a lot of money that your organization might have spent on some transaction. A piece of hardware, some software, maybe even another company. Are there times you’ve felt they overpaid for some item that you wouldn’t have bought?

Most of the people I know work for someone else. Their concept of large or small values is often dictated by their own view of personal finances. While we might spent US$1-2k on a computer, many of us wouldn’t buy a $50,000 server for home.

For friends that own a business, even a solo one, they often have a slightly different view of costs. A business might need to easily invest $10k in a project, a piece of equipment, or something else. They often find that spending money is less about the amount than the time it takes to recoup an investment.

I wonder how many of you look at a $100,000 purchase and don’t see the value returned. Perhaps you’ve seen your company spend $10mm and you wonder if there was any rationale behind the purchase.

Dealing with any amount of money is hard when you don’t necessarily have all the information, and you’re not used to spending at that scale. I know each time I’ve bought a bigger house, it’s been a bit of a shock and created anxiety. However, when I look back years later, I often feel differently.

I wonder how many of you feel that way about purchases by your organizations over time.

Steve Jones

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