Let us diverge briefly to talk about two fictional people (could easily be real) called Bob and Ken. Both Bob and Ken run their identical businesses where both of them sell clothes. Bob on the one hand is very keen on paying the absolute minimum for the stock that he purchases and pays $5 per unit. Ken on the other hand pays $7 per unit and through idleness or a lack of bargaining ability or whatever pays 40% more for the same items than Bob does. In effect then this means that Ken is spending $2 per unit that he doesn’t have to spend…….essentially this is dead money.
If both Bob and Ken have the same purchase levels of 2000 units per month then Bob has spent $10,000 per month on stock while Ken has spent $14,000 for the exact same items and the exact same number of units. So Ken has spent $4000 that he simply didn’t have to spend. This will either mean one of two things, that Ken will make $4000 less in profits than Bob assuming he sells at the same price or he will have to recoup the difference by increasing the selling price. The problem with increasing the selling price is that he could then sell less items and cease to be competitive.
So what has this to do with poker? Well the exact same process happens in poker all the time but it isn’t just Ken that is idle when it comes to paying too much for his goods. Untold millions of people the world over do the same every day. If you buy an item for $100 that you could have bought for $80 then this extra $20 has essentially bought nothing. How would you feel buying this item for $80 and then setting fire to $20? Most people would be horrified at the thought of setting fire to money but this is almost the same as wasting it.
As I said, how does this relate to poker? Well millions of poker players simply use too much money to get the job done when betting or raising less amounts would suffice. For example let us say that it is folded to you on the button and you have the 10c-8c. You want to raise and make it 3.5bb. If your goal was to take down the blinds then you would have achieved this with a 3bb raise if both of the blinds held junk. So the extra 0.5bb is essentially wasted because if your opponent has a playable hand then this extra half a big blind will not deter them from calling or 3/betting you.
If they 3/bet you and you fold then you have saved 0.5bb. If you add this up over the space of a session then it amounts to an awful lot of money. A multi-tabling player could be facing this situation ten times an hour and that is 5bb per hour. If they are playing $0.50-$1.00 then this equates to $5/hour and for a full time player then this is $10,000/year and all because you made it 3.5bb to go instead of 3bb.
It is only when you start to compound the effects that you can see just how over spending can really drag down your earn rate. Another example could be if you raised and the big blind called. The flop came Qs-7c-2h and you believe that this flop has not hit your opponents range. They check and now you want to c-bet into the 6.5bb pot……..but how much? If you opponent holds nothing then you do not need to bet the pot or even three quarters of the pot. A half pot bet would take this pot down without offering your opponent great odds to continue. If they fold to a 3.5bb c-bet then betting 6bb is essentially creating dead money because it loses 2.5bb every time your opponent has flopped something that they will not fold.