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Learn from their mistakes:
TheStreet provides a short case study on penny-pinching gone wrong.
A small firm typically distributed 500 fliers to current and prospective clients each month, as well as 5,000 copies of the monthly newsletter. Each of these jobs had a similar setup cost, about $50.
The business owner came in one day, ecstatic that he had discovered a one-cent per page savings for the flier and a ten-cent per copy save for the newsletter in a town 60 miles away — a round trip of 120 miles and three hours total drive time.
As a result, he would save $5 on fliers and $50 on the monthly newsletters, but he would have to spend $50 in new setup expenses at the new supplier for each project, or $100 in setup costs plus petrol and his time. The new vendor’s total expenditures were $100 for setup, $20 for fliers, $2,450 for monthly time, three hours of travel time at a calculated $100 per hour, plus gas and mileage for 120 miles at $12. The business owner’s new “penny-saving” expenditure was $2,892.
On the other hand, the business owner had zero setup expenses on the flier and a reduced setup cost of $35 for the newsletter at his regular printer across the street. Only the inner content of the monthly newsletters, not the covers, were charged. So, with the existing provider, his entire cost was $35 for setup costs, $25 for one-page leaflets, and $2,500 for the monthly newsletter. The total cost was $2,560.
When comparing the overall cost of the out-of-town “bargain,” he found that it was $332 more than his regular vendor.
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