You may not realize which products took the most time to produce, but in every case, the main commodity you bought was someone else's time.
People typically can comprehend the old phrase Time is Money. What is a little less well understood is that by definition, if time is money, then money is time. When it comes to the things you spend your money on, what you think you're buying is only a fraction of the real picture. Whether its something like a video game, that feels as though it was created with you in mind, a fancy car that is really eye-catching or a nice juicy steak that tastes so good you can hardly believe it, the product you think you're buying is not at all what you're really buying. That's because behind the scenes, much like Santa's elves at the North Pole, there are little armies of people behind the things you buy, and the most significant cost of everything you buy is their time.
Duplication Cost Of Zero
Bill Gates ain't the richest man on Earth for nothing. The richest people on Earth have figured out one unique trick that the rest of us seem to be unable to comprehend: build something once, then sell the digital reproduction for an amount that people will consider fair value. Of course, the digital reproduction will actually cost $0. In fact, it might be more expensive to measure how much it costs than to actually make the duplicate.
Sometimes, the effect of this process can seem extremely heartless. I'm reminded of a video game company (who shall remain nameless) who hired on a huge gang of game programmers to help produce a hit game. The hours were long and the road tough, but this group of programming stars trekked their way to the finish line, producing a hit game for their employer. And just like that, as soon as the game hit the open market, their employer made them do the same: pink slips for the whole team. It seems awful, a company turning its back on the very people who delivered them the goods. But in the digital world, that behavior is really the name of the game. Pay big money for the original copy, then sell duplicates for $75 each. The real key, however, is to cut your costs as soon as the original copy is complete, so you don't have to keep making payroll after the heavy lifting is done.
With the rise of the gig economy however, we can expect this type of thing to be the norm. Give me a few good months of hard work, then we'll say sayonara. I'll sell duplicates for a reasonable price, and you'll move on to your next gig. I won't need your help with the duplication process, because the only real work was creating the thing in the first place. It may seem like a fairly mean-spirited world, but it is efficient and it does seem to be taking over.
Big Things Take Big Effort
When you buy a car, you may be somewhat aware of the labor costs involved in its construction. After all, even after production of cars has shifted away from the United States and into other countries throughout the globe, there are still 960,800 people employed in the automotive industry. Those jobs require a paycheck, and when you buy a new car, you're the one whose signature goes on the bottom line.
It might be tempting to think that when you buy a car you are buying its design. And there is no question that design is a huge factor influencing consumers in the car industry. Two vehicles illustrated this distinction in a big way.
In 2000, General Motors released the Pontiac Aztek. If you are unfamiliar with this car, you probably have not watched Breaking Bad (which you should) or you have not Googled: Ugliest Car Ever. Either way, once you get a glimpse of it, you're pretty certain to agree that the thing is a dog.
The Aztek was in production from 2000 until 2007. During that time, its best sales year was 2002 during which Pontiac sold 27,793 units. All told, there were 119,692 Azteks sold in America. Interestingly, given the Aztek was a noteworthy car for all the wrong reasons, it might be wise to pick up a 2007 model if you can get your hands on one: there were only 69 ever sold, and there is no question they will someday command an enormous return as collectors items.
In 2001, General Motors released the Buick Rendezvous. The two vehicles shared the same shortened U-body platform, which means that apart from their exterior design, these two were the same vehicle. General Motors used this tactic of sharing platforms between its various family of car brands fairly often. Another one the more infamous examples was the grotesque Cadillac Cimarron, a vehicle presumably intended to cover the segment of consumers who wanted a luxurious econo-box. The Cimarron was the same vehicle as names like the Chevrolet Cavalier and Pontiac Sunbird.
The Buick Rendezvous enjoyed significantly superior sales figure to that of its corporate cousin the Pontiac Aztek. While the Aztek's best year was a fairly meager 27,793 units sold, the Rendezvous worst year was its final year at 15,295 units sold. At its heyday in 2003, the Rendezvous was a legitimate juggernaut, with 72,643 cars sold. All told, in a run that was one year less than the Aztek, the Rendezvous sold 347,742 units - nearly three times as many as the Aztek. Design was clearly a major differentiator.
But the thing with design as it relates to car is this: it is only really built once. Its not as though factory workers at car manufacturers build a car and then wonder how they'll come up with the design for the next one. Major manufacturers like Ford, General Motors and Chrysler produce thousands of cars each year, and each car's design is figured out long before production. Sure, the initial design takes time, but each subsequent car that gets built is done so on a design that costs $0.
What does not cost $0 in each car built is the time it takes for workers to assemble seats and steering wheels and to test that the vehicle performs according to the company's claims. You might think that you're paying for how the car looks, but you're really paying for how hard it was to build.
Nobody Makes a Steak
When you bite into a juicy steak you barbecued in the hot summer sun with a cold beer at your side, you are probably not thinking about how worth it the steak's price was due to the people involved in getting it to your table. Instead, you're probably thinking the steak was a bargain due to the taste. When it's just you and that steak, it's as though no other person was involved in producing it. And if you're a farmer, you may be right. But for everyone else, that steak took major effort.
Food, like all raw materials, is purchased because of its perceived value. Gold has value in any form, such as a ring or necklace, because if you melt it down, you can sell the raw material on the open market. A steak does not have the price it has because that is what the cow was willing to accept in return for its ribs. If the cow had any say in it, the steak would probably cost you an awful lot more. Instead, the price of a steak is set by what it costs people to perform tasks like feeding and nurturing a cow to maturity. Cows need attention in terms of healthcare, and few people volunteer for assignments like that. Cows need to be transported and butchered, and in both cases, people need to spend their time in those capacities. For each, they expect to be paid.
We already talked about the 11 industry groups jacking up your restaurant bill. When you enjoy a nice meal out, you probably don't think about the fact that 50 cents on every dollar you spend goes to something that is not the food on your plate or drink in your glass. Instead, that money goes to pay people for the time they spend on processing and transporting that food to ultimately arrive on your table.
Summary
The products you buy are the culmination of the time it took to produce that item by the people involved in making it happen. Your perception of value is skewed because you see what marketers want you to see, which is the shine of the gold on the necklace, the lines on the beautiful car or the sizzle of the steak. But the fact is you are actually paying for someone else's time. So when you do make a purchase, you need to understand if you are paying for the real deal, or if your dollar is one of the many paid for a $0 duplicate. If you find most of your money being spent in this way, maybe its time for some tough questions to see if you're spending your money in a way that you actually value: on goods that took time and effort from a real human being.
Would you want someone to purchase something you made as a duplicate for the same cost as the original? Do you purchase digital goods that cost $0 on a unit basis?