Within Affordability, Customer and Cost are two components of the “Triple Aim” that intersect in a way that provides a viewpoint on a ‘correct’ price, an understanding of the overall cost and expense from the customer’s perspective.  It also involves a window into customer and cost related to Customer Profiles, Target Markets, Voice of the Customer and Competitive Analysis.  For Affordability, Customer and Cost are defined as follows;

Customer

• Customer is defined by those who purchase, those capable of purchasing, those recipients of the organization’s work, and those targeted for purchasing the product or service being offered.
• The Customer, or Individuals within the Targeted Market, is the aggregate of buyers or purchasers or recipients of the product or service being offered.

Cost

• Customer Cost is defined as the customer’s actual overall cost of a product or service, or total operating cost including the purchase price, maintenance fees, associated costs and any other affiliated costs related to that product or service.
• Organization Cost, is viewed from the organization’s perspective, with consideration of all costs, including direct costs, labor costs and indirect costs to produce or provide the product or service using an internal viewpoint. When organization cost is removed from the revenue produced from the sale of a product or service, the result is profitability (Revenue – Cost = Profitability).  For non-profit organizations, when cost equals funding available a balanced condition is achieved.

Where Customer and Cost overlap, the price or customer cost is established.  This ranges for the initial financial outlay for the customer (i.e., purchase price), to the ongoing maintenance and sustainment charges and fees, including the logistics for responsiveness, and the benefits attained and retained by purchasing the artifact or amenities being purchased.

Paul