A Product Management Rule of Thirds: The Hidden Cost of Decisions

There are three costs involved in identifying, approving, building and operating any new product or feature:

• Direct Cost — The expense of purchasing, licensing, developing, testing and integrating.
• Opportunity Cost — The risk that the time you are investing might be better spent elsewhere.
• Support Cost — The ongoing time and resources required ad infinitum to monitor and maintain the product.

Direct Cost is often negotiated and frequently underestimated. But, it can be recorded on a spreadsheet and so is overvalued in strategic prioritization. It might be the LEAST important expense.

Opportunity Cost is sometimes discussed, rarely understood and impossible to scientifically measure. It is the MOST important expense.

Support Cost can be difficult to estimate and is diffused across departments and teams. It is felt most distinctly by engineers and customer service specialists. Support is an incremental cost but over the lifetime of the product can be the BIGGEST expense. It is infrequently considered in prioritization decisions.