Opportunity Cost and Staged Investment

Spend a month on the project and you can't spend it on anything else. Opportunity cost is the alternative that would have been genuinely worth having, a contract you could have taken, a skill, the rest you keep deferring. Not every forgone possibility counts. Just the best feasible one.

Compare like with like: the same span of time, a similar workload, money in and out, and what you're actually after. Say pushing course sales over the coming month brings in 18,000 yuan, with 12,000 going out on promotion and delivery, leaving 6,000. A shoot order that takes about the same effort leaves 9,000 after its own costs. If this month's cash is the goal, the order wins.

One warning about that arithmetic: if the course keeps selling after this month, the future sales belong in the comparison too. Write that income, its costs, and the time it requires onto paper as their own line, then compare the two complete paths rather than just this month. These figures are invented for teaching. The structure is the point.

When several options truly can't coexist, each one just has to earn its own keep. Count the same foregone income once, not once per option.

Production costs that have already been paid and cannot be recovered, along with hours already spent, remain unchanged across today's options. That part is sunk, and the honest move is to ignore it while comparing the next steps. Look only at what each option adds from here on.

Then comes the part people miss, because existing assets can still have recoverable value. The cameras can be sold. Content already made can keep selling. Code and know-how move into other projects. Price those recoveries and put them where they actually belong. And stopping isn't free either: promised deliveries still need to happen, refunds still need to be paid. Those are future outgoings, so they go on the future side of the ledger.

Slack's early team spent years running Glitch, an online game. In retrospective notes from people involved, the audience never grew large enough to cover development and the cost of keeping it running, so in 2012 they shut the servers down and spent what was left of the budget, and whatever they'd learned about working together, on a new communications product. That one story contains two decisions that deserve separate answers: should the old business keep running, and what is the remainder good for?

When the outcome is truly unclear, stop buying whole journeys. Buy small steps, each one big enough to answer a real question, small enough to survive a wrong answer. First find the unknown that decides everything: will anyone actually pay this price? Can you deliver at the cost you assume? When do clients pay? Then set up one experiment aimed exactly at that unknown.

Before a round starts, write down five things:

1. What you're checking. Specific enough to point at a customer, a use case, a quote, a delivery condition.
2. How you'll see the answer. Target customers meet a clear, unambiguous price. A handful of real deliveries happen.
3. Your ceiling. Money, hours, and a stop date, all in writing.
4. What counts as a yes. Which result justifies going on, and which result says change something, the price, the audience, the terms.
5. What carries forward. Customer feedback, reusable work, and whatever funds you still control.

Afterward, hold the results against the question you set. Payment and delivery both came through cleanly: expand, gradually. Interest showed up but aimed at a different use: adjust the design and run it again. Several rounds in, nobody gives you a reason to buy, and the same money and hours have somewhere clearly better to go: end this path.

A trial earns its cost only when it changes what you do next. If you already know the answer, spending to confirm it is just paying to hear what you believe.

For how to test willingness to pay and set prices, see Willingness to Pay and Demand Validation. For how spending and collection timing fit together, see Cash Cycles and Funding Growth.

• For a project already underway, read The Project Is Half Done. Continue or Stop?. Use Experiment Results and the Conditions Behind Them to interpret completed trials.
• To compare learning investments, use Building Skills Through Useful Feedback to assess what you gain, then When the Pay Is Low, How Do You Know the Job Is Worth It? to compare cash and learning opportunities.
• To compare financial assets and business investment, follow Turning investment returns into actual gains for consistent return measures.

The full business reading route is From Finding Customers to Making Money.