Opportunity cost: why chasing good revenue kills great revenue

Executive overview

Every business decision you make has a hidden price: the revenue you can no longer earn because your time and energy are spent elsewhere. Accepting profitable but low-value work blocks higher-value work from getting done.

The best decision is often the one that refuses the obvious money.

The core concept

• Opportunity cost = revenue lost by not pursuing a better alternative
• Ask: "How much money am I losing by not taking the better opportunity?"
• Good opportunities can be the enemy of great ones

The speaking fee example

• Donald Miller accepted $5,000 speaking gigs that prevented him from writing books
• Recovery and travel time consumed all creative bandwidth
• A $5,000 gig was costing an estimated $500,000 in foregone book revenue
• Solution: raised his fee to $15,000+ to filter out low-value engagements

The coaching programme example

• A staff member proposed a coaching programme at $800/month per client
• Full analysis revealed hidden costs: 20+ staff, two managers, health insurance, turnover, administrative overhead
• The bandwidth drain on creative work made the opportunity cost too high — decision rejected

Applying it as a leader

• Before any decision, ask your team: "What is the opportunity cost on this?"
• Two sides of the equation: revenue you forgo, overhead you add
• Most teams chase visible revenue without calculating the invisible cost
• Embedding the phrase in your team's vocabulary changes how decisions get made