The phrase is old. It also contains questionable logic. It is, nonetheless, true for many businesses. Pennywise refers to being very careful with your money and how you spend it on small items. This is a good practice obviously. Pound Foolish, by itself, means to waste money. Particularly larger amounts or expenditures. Two simple phrases that are mirror opposites. Pennywise and Pound Foolish, when combined, can become a major revenue drain and in some cases business closure.
Cheaper Isn’t Necessarily Better
Do you worry about saving 10 cents on each hot dog you serve in your restaurant? Sure, every business has to watch expenses. Conversely, is that cheaper hot dog so poor in taste that your customers stop buying them and your hot dog revenue drops by 40%? That 10 cent savings suddenly becomes not so profitable. That is Pennywise & Pound Foolish in a nutshell. The outcome from a single-minded focus on saving at all costs can actually result in lower revenue that completely eliminates any savings benefit. In fact, you could RUIN a business from concentrating on cutting pennies when the consequences end up costing you, customers. [tweet_box design=”default” float=”right” width=”40%”]What Is Pennywise and Pound Foolish?[/tweet_box]
Cost-Effectiveness Is The Key
It’s not that you shouldn’t cut your costs or at least manage them. The issue is will those cuts actually result in losses or gains. Looking at costs while realizing some are fixed and needed can keep you from making a big mistake. Are your cuts cost-effective? In other words, before you cut something, take into account what hidden financial issues may arise. Will your cut save you money or end up costing you even more? Here at The Beacon Center, you will find our packages are the textbook definition of cost-effectiveness. Everything you need for a great event in one, low priced package. Why not schedule a tour and see for yourself?