It is very important at Thousand Year Films that everyone understands the concept of opportunity cost as it is the true measure the cost of a course of action. Further, not understanding opportunity cost can lead to inefficient prioritization and decision making.
Opportunity cost is the highest valued alternative that had to be sacrificed for the option that was chosen OR the cost of using scarce resources for a certain purpose, measured by the benefit forgone by not using those resources in their next best alternative use. The true cost of something is what you give up to get it. This includes not only the time or money spent in buying (or doing) something, but also the economic benefits that you did without because you bought (or did) that particular thing and thus can no longer buy (or do) something else.
Determining Opportunity Cost
These are some of the questions our team asks when making any decision, big or small.
What am I losing (or not getting) if I choose this particular action?
What am I gaining if I choose this particular action?
Is it greater or worse that what I am losing?
Is the time spent on a particular action worth the final outcome?
Is the money spent on a particular item (prop, wardrobe, supply, equipment etc.) worth the contribution the particular item will bring to the production?
Which will provide us with the highest level of production quality or efficiency within the scarcity of our resources (time, money, materials etc.)? The deciding factor is what is ultimately going to show on screen the most (positively or negatively). Discerning this should lead to your final decision.
Ask the same questions about the alternatives.
It is important for each person involved with production; cast and crew; to always consider the opportunity cost of any decisions made. Doing this can avoid falling into other traps such as ‘perfectionist’ tendencies and it will play a significant role in keeping the production on schedule and on budget while maintaining the highest production quality that is possible within the resources of the production.