The law of diminishing returns

It also hit us with the book that I’ve just written entitled 16 Steps to Wealth. I started and finished the writing within a month of being bitten by that puff adder whilst at home after 3 weeks in hospital, and then during lockdown which immediately followed. But then the editing started. One read through after another, both by myself and by Helen. One month later, we were probably about 90% close to perfect, another month and we were about 98% there. Yet another month and I think we will publish next week. Again, the law of diminishing returns.

Now, the law does not always apply. Take restaurants for instance. Did you know that the more expensive the menu item is (excluding wine) the better value? Why? Because the price is made up of three components, fixed cost (rent, salaries and the like), variable costs (ingredients) and profit. Most restaurants are happy to make the same Rands profit per menu item, so the graph looks like this –



In this example, if you spend R120, you get a certain value for money, but if you spend R140, you get double that value, because the only increase is the cost of ingredients, the overheads and profits are already covered.


Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>