What is opportunity cost?
Opportunity cost: What you give up by choosing one option: for an hour of your time, what the best other use of that hour would bring.
Example
Nora's hour of delivering buns costs her no money, but a helper would earn $15 for it. If she could spend that hour on paid work worth more, the delivery hour costs her that income.
Made-up people and numbers from the cases of our course; the math is real.
A common mistake
Counting only money that leaves the account. Your own hours have a price too: what their best other use would bring.
Try it with your own numbers: Real hourly pay calculator (free, no sign-up).
Practise this in block 1
Block 1 of Ownwise is free, with no account needed to start: short lessons on costs, margin and break-even, then a made-up case where you make the decisions. This term has its own lessons in block 5, part of the paid practice pack.