10 ms·

Dont think of price, think of cost per use

143 points by sergnio 4y ago

pxeboot 4y ago
I would expect the monthly service fees to be included in the phone example. And transportation costs when going out for food or drinks. As a hiker, I have spent a lot of time calculating the cost and weight per calorie of food, and the fuel to cook it.
GJR 4y ago
The counterpoint, based on the assumption that eating out is an experience, rather than a commodity: https://bigthink.com/neuropsych/want-happiness-buy-experiences-not-more-stuff/ https://bigthink.com/neuropsych/want-happiness-buy-experienc...
uhuruity 4y ago
Seems to this ex-economist like cost per use is trying to be a crude approximation of $/util
mindslight 4y ago
There's some wisdom in the overall point, but the example of a mobile phone is completely upside down. I for one don't want to think of pulling a device out of my pocket in terms of some kind of microtransaction. Rather I want it to be a natural extension of my own mind, including running software that serves my interests rather than corporate spyware. Of course one is always able to do a post-facto "price per use" calculation, it's just an extremely myopic paradigm to be thinking in. Even $/month is too small minded - that's how salesmen push you into paying way too much and financing things. But thinking $/year starts to make sense, letting you take into account things like how long upstream software is going to be supported etc. Also yes, most everybody knows the tabs for eating/drinking out add up to a considerable amount of discretionary income. Those too are better brought into the $/mo and $/year paradigm.
RyEgswuCsn 4y ago
It should really be "cost per meaningful use" or "cost per productive use". Being able to check your news feed on your phone 60 times a day probably doesn't confer as much utility as being able to check your friends' messages 10 times a day.
- JetAlone 4y ago
  I don't see why you got downvoted, maybe by a resentful droog or two. This is a fantastic addendum.
x43b 4y ago
I liked the general idea but found the examples counterproductive. I personally prefer cooking whole foods at home. However, paying $14 for one meal would provide calories needed to live. I do not "need" to touch my phone 32,000 times at 2 cents a piece. 30 years from now I will hopefully retain some my experiential (expensive) travel memories but may not remember/care if I used a value or flagship phone for a given 24 month period.
- deleted 4y ago
  [deleted]
tracerbulletx 4y ago
Trying to quantify the psychological value of our experiences to do some kind of double entry booking that justifies our expenses seems like kind of a fools errand to me but that's pretty much what you'd have to do if you wanted to optimize your personal expenses. Time of use doesn't necessarily translate to value or make sense to amortize by. If I do something that makes me just slightly happier or even worse off many times, or I do something for a short time only once creating a memory I look back on for the rest of my life with satisfaction then obviously the single use expense was superior.
- formerkrogemp 4y ago
  > what you'd have to do if you wanted to optimize your personal expenses. Yeah, it's called budgeting and being poor. Some of us try to maximize this satisfaction and lifelong memories while avoiding incurring significant personal debt on a low salary. Tradeoffs and opportunity costs abound. Of course not everyone should or would be better off being cognizant of these costs and quantities, but some of us have to be by necessity.
slategruen 4y ago
The article falls short on the comparison part. Why is the author comparing the cost of using a phone for a couple of minute to the cost of eating out that you usually do maybe once or twice a month? The duration should be similar. Following the author's example of buying a $1000 phone every 2 years, that would cost about $9.2 every week or about two McDonalds meals every month. If I'm given the choice between the two, I'd take the McDonalds.
paxys 4y ago
The overall idea is better expressed as – value stuff based on how important it is to you vs just the dollar amount associated with it, which is pretty generic and obvious advice. Trying to simplify it down to "cost per use" or some other similar metric is pointless. Is the $3000 flight ticket that you use once worth more or less than a $1000 phone you use thousands of times or a $5 coffee you drink in one gulp? No one other than you can answer this for yourself.
- leetcrew 4y ago
  of course it's not possible to come up with an ironclad set of rules on how best to spend money, especially not in the space of a single blog post. but that doesn't mean it isn't worth trying. if nothing else, it helps to become more intentional about how you spend your money, which most people would probably benefit from. I personally don't find the concept described in this blog post very useful. I prefer to think in terms of annualized/amortized costs, especially within the perspective of money-stress-time tradeoffs. I could see others finding it helpful though.
nayuki 4y ago
Along these lines, I find that not many people correctly calculate the cost-per-use of their car. They only think of the cost of gasoline burned, and maybe tolls and parking. They don't think about the cost of insurance divided by the number of trips, or the capital cost of the car amortized over the years of ownership. If people thought hard about the cost-per-use of driving, then other transportation options start to look more attractive.
- dataflow 4y ago
  > the capital cost of the car amortized over the years of ownership How many years will I own my car? How do you know? Maybe some folks buy a new car on a regular basis, but others will keep a car as long as they can. The denominator isn't known for everyone here. And then there's inflation, recession, etc. which can make the numerator unclear too.
  - AnimalMuppet 4y ago
    All true. But if you're one of the folks who regularly buys a new car, you kind of know that. If you're one who keeps a car as long as you can, you know that too. So you can make, not totally accurate calculations, but calculations that are enough within the ballpark to show you whether transit is an economically interesting alternative.
    - dataflow 4y ago
      How accurate is "enough within the ballpark" though? This isn't something where an order-of-magnitude estimate or even a factor of (say) 2 error is negligible. Can you really predict the future to within like 10% accuracy? How accurate do you think you need to be? Let's do something resembling reality. Say your subway transportation costs around $13/weekday. (I just looked up a random round-trip BART ticket for the Bay Area, in case that makes it easier for people here to relate.) Probably more like $20/weekday if you add bus and parking. Now say the drive for that is around 30mi. At $4/gal gas (pre-2022) and 30 mi/gal the driving cost might cost you $4/day just for gas (probably optimistic). Say you buy a $35k car and plan to keep it 8 years, then sell it for $5k. That'd cost you roughly $14.50/weekday in depreciation. Add that to the gas price and it's around $19.50/day. I haven't even accounted for maintenance yet (on the car side), nor for non-work rides (on the public transportation side), but so now you have ~$20/day vs. ~$20/day. How in the world do you decide? Now consider gas prices shot up > 50% in a year. And we have a recession coming and you might lose your job (less gas usage, I guess?) and so decide to keep your car longer. And we have inflation. And your car might get totaled in between... or not. And you might have random stuff come up that increase costs on each side... or not. Exactly how do you do the math here to figure out which one is more beneficial?! I'm not saying you can't do the math, but as I see it, every factor adds in such a huge margin of error into both the numerator and the denominator that the result of the computation easily becomes pretty useless. And this is before even accounting for convenience/QoL improvements that you can't put into numbers... what's the value of being able to get your kids their favorite meal, or show your friends around town, or...
dubswithus 4y ago
It’s true that Thai curry is a one use item. But have you tried eating an iPhone?
- fshbbdssbbgdd 4y ago
  Is a human stomach within spec for the IP68 rating?
Brajeshwar 4y ago
I got the gist of the article with a quick speed-read. I have kinda used this unknowingly for a very long time. I have also helped a lot of people make buying decisions, especially when they find the upfront cost high. My view is -- start from the cost of your use and buy it even if it is on the costlier side upfront. This is also akin to buying smaller number but of high quality item so they last longer and thus the life-time cost to usage is way beneficial than buying cheap that you need to repeat frequently. Breaking down the cost down to the number of hours use per day, and thus if a Laptop lasts 3+ years, how much is the actual cost for each hour. Now, will it "spark joy" buying a better but costlier Laptop that will last years.
- XorNot 4y ago
  Same for me: cost per use is helpful to get you thinking about total cost of ownership and product lifetimes. It's a really good way to evaluate how much you should pay for the second purchase of a tool - also whether the price is worth the warranty. My Bosch laser Level for example cost $150 more then the alternative, but came with a 6 year as opposed to 1 year warranty. At a total price of $600, I was buying it at $100 a year guaranteed availability. Whereas the cheaper option actually cost me $450 for only 1 guaranteed year of service.
  - number6 4y ago
    And for tools: If you buy the inferior one and then break it or decide to get the upgrade, your cost will be $450 + $600. You will not overpay $150 but $450. Also better tools tend to give you better outcomes.
    - yourusername 4y ago
      With tools you can go both ways. Good tools give you better results, last longer and feel better to use. On the other hand they often cost 4x what a cheap tool would cost that you wouldn't wear out as a DIY'er. A no name hammerdrill is €50 and a boschhammer €200. Most homeowners won't wear out the no name drill drilling a few dozens holes in concrete. If you do wear it out your final costs is only 25% higher than if you went for the pro tool to start.
jeffwilcox 4y ago
Agree, to a point. This was how I justified purchasing a relatively nice stereo setup 13 years ago. Today, I look at the math, on a cost-per-day or cost-per-use angle, and I'm so happy that I went for something nice that I enjoy. I do feel like cost-per-day amortized is probably more interesting for a lot of decision making. We probably over-estimate how often we'll use a product or service.
bachmeier 4y ago
> this means you spent about $0.02 per use, 2 cents every single time you use your phone. That seems like a way better deal than the $14.05 McDonalds meal that you just bought last week What? Why would you compare a "use" of your cellphone to a really big McDonalds meal? I mean, I should stop eating because there's no way I can eat a meal for less than the cost of using a cellphone one time?
BeetleB 4y ago
This is completely backwards. Always think in absolute dollars and not in rates. $1000 is $1000 whether the cost per use is pennies or tens of dollars. Thinking in terms of rates is how people would fall for predatory installment purchases in the old days (you can have a new computer for just $2.5 a day!) The other obvious problem is looking at cost absent of a market. It's not just how much it is worth it to you, but what the competition is offering it for. I personally pay less than $400 a phone and keep it for over three years. Paying $1000 for a phone just two years is not an improvement. Edit: I spoke very dogmatically above. Using rates can be OK in certain situations where the analysis becomes equivalent to using absolutes, but it's not at all rare for rate analysis and absolute analysis to differ, and people make the mistake of using rates there. You will never, ever, go wrong by looking at absolute amounts, though - and it's usually the easier way to analyze. In my engineering undergrad, Engineering Economics was a required course. I remember a fellow student said "I often return other engineering textbooks to get some cash, but this book is more useful than most of my engineering ones." Decades later, I can say he was definitely right. All too often I see engineers making poor financial decisions based on heuristics when they're quite capable in doing the (simple) math. But a lifetime of being exposed to flawed ways of thinking of money provides a convenient shortcut.
- nextlevelwizard 4y ago
  >I personally pay less than $400 a phone and keep it for over three years. Paying $1000 for a phone just two years is not an improvement. Either you aren't using your phone much or you are needlessly suffering with inferior product. Wearing cheap shoes for years when you could afford comfortable high quality shoes is not a virtue. Same goes with tools we use.
  - HeyLaughingBoy 4y ago
    Have you considered that other people have different needs than you? My last phone (Nokia 640) cost about $200 and I kept it for 6 years. My current Samsung A12 is better in every respect and cost about $170 through AT&T. I'll probably keep it at least 5 years. I honestly can't imagine what usable benefit a $1,000 phone would provide.
cozzyd 4y ago
By this logic, paying $10k for a day of "enhanced air" (whatever that might be) is a great deal. After all, you breathe something like 20,000 times a day.
- j7ake 4y ago
  It is literally how mattress and sofa companies sell their products at such inflated prices.
- deleted 4y ago
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r00fus 4y ago
I just amortize the cost over the useful period. $2k bed / 10y = $200/y. If that’s worth it for me to upgrade then it’s simple to make the call. We spend a third of our life sleeping so having a good bed is a worthwhile investment.
- Gigachad 4y ago
  That assumes the $2k bed is any better than the $1k bed. There is a lot of info proposing it’s not even better than the $500 bed but the marketing teams can easily sell it at a massive markup because people split the cost over years and use.
  - r00fus 4y ago
    I don't know about newer viscoelastic foam beds, but I've had the experience of buying several standard foam mattresses (due to life event lots of family was flying in) and there is a quality difference between the lower and mid grades. One would typically try them out at the showroom - it'd be really nice if they could let you sleep a whole night on one.
yalogin 4y ago
This is going to absolute lead to price gouging because today you can only items in one segment. For example price of bread to other bread. But if you start using cost per use all of a sudden you will be forced to justify 50 bucks for a loaf of bread or 100 bucks for a peanut butter bottle, after all a jar of peanut butter lasts a long time. Yes supply and demand and competition will still exist but they will all learn and adapt.
nGaR5zKE 4y ago
Don't think of price, think of return of investment (ROI). The decision if I should buy a phone for $400 or $1000 should come after answering the question "Are the extra features for $600 worth something to me?" - for some people they'll be worth - e.g. having better quality photos of their family, or having better FPS on the high-end MMORPG. Others don't need that, they don't have a ROI on the extra $600, so should skip the more expensive one. Now, going out with an old friend and spending $100 on a night out - it's a huge ROI for some, for others not, although I think the latter wouldn't have gone out at first place. The same is valid for holidays and any kind of experiences - people will have huge ROI and will go. The one McD menu - that's where I personally will never find ROI, so can't speak about it. Even if I am starving, buying a loaf of bread, butter and some potatoes for less than $14 will give me much more ROI.
hitovst 4y ago
It drives me nuts that we don't have a printer/toner database with cost per page.
- asciimov 4y ago
  Back in the bad old days, when I had an ink jet in college, cost per printed page was easily in the dollars possibly even as high as fives of dollars per page. Later in college, I bought a used laserjet from the university surplus sale for $20. That little printer got me through several reams of paper before the toner went out. By that point I was in the pages per penny range.
- The-Bus 4y ago
  I believe a lot of commercial contracts for printers (Canon, Xerox, etc.) can be priced this way.
j7ake 4y ago
The fallacy in the article is trying to compare price of phone versus price of food. The two are so different that it makes no sense to put them in the same comparison. One should compare phones within the category of other phones. Compare food with other foods.
efitz 4y ago
There is a subtlety missing from this article. The absolute cost is relaxant as well as the cost per use. The absolute cost is very important because it relates to budgeting and total resources. The cost per use is interesting for making decisions between exclusive alternatives. Should you buy a hot tub (no)? It’s not just the initial cost but also the maintenance cost (chemicals). When you divide total cost by actual use in hours it’s clear it’s a bad deal. I often think of entertainment cost in terms of cost-per-entertainment-hour. AAA video games, for example, provide a much lower cost per entertainment hour than movies or amusement parks, for example. I often think of cost in non monetary terms as well. When you think about the hours required to maintain something per hour of enjoyment, a lot of things that you can afford all of a sudden seem like bad ideas (many kinds of pets, hot tubs, etc.) So thinking about usage in a buying decision is a very helpful tool in making good decisions, although it’s in addition to looking at whether you can afford the total cost.
- pnut 4y ago
  Not a day goes by, that I don't loudly exclaim "god I love this hot tub, best purchase ever" to my dog as I ease into it on my lunch break.
nikolqy 4y ago
Really interesting way of looking at things. I use my phone about 6 hours every day. That’s 2,190 hours a year. That’s a lot of time yikes, but anyways, that’s about $0.50/hour of use or about $3/day. I pickup my phone about 110 times per day. That’s $0.027 per pickup. Pretty cheap and worth it when you look at it in those terms. Streaming services, not so much. That’s the magic of marketing. I love pay as you go pricing, but when it’s realistic.
deleted 4y ago
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kuratkull 4y ago
This is incorrect for many sane reasons. You don't get any value out of your phone for every use, so paying that 0.02USD is not cheap. It's like a pay-per-use subscription. Everyone who deals with investing knows that absolute money means everything - every 1000USD you spend is much costlier because it never has a chance to collect compound interest of inflation-adjusted ~5% annually for the next 30 years. That works out to 4481USD that you are never going to have.
brailsafe 4y ago
This is how I think about a lot of things, also with consideration of the absolute price, but I try not to take it too far, because you do need to just enjoy your purchases some times. I try not to view my purchases now within the broader context of my entire life of what-ifs, and accept a certain amount of risk that I'll just need to sell some stuff or take a loss if major circumstances change. When I did do this, I ended up living in a 1 Bedroom + Den, except the den was empty because I couldn't rationalize buying any mid-tier furniture, since it was likely that it would either take forever to sell, or I'd need to just toss it, but either way it would be irritating. I do consider them in the context of the year or a few years, and the depreciation on whatever it is. When you break down the cost of a car for example, with an eye for both of these extremes, it becomes very challenging to rationalize the purchase, because it almost never works out.
kqr 4y ago
A related idea is depreciation. You haven't lost $700 by buying a pair of skis. You have exchanged $700 in cash for at least $500 in a pair of skis that is now previously owned. So you might lose, say, $200 immediately for the privilege of buying something brand new. And then another $100 if we include up-front the effort to sell them to someone else. But the rest of the money is still there, in the shape of skis. As you use the skis they will depreciate in their second hand value -- this is when the money is actually lost, bit by bit. You can estimate how much the second-hand value of the skis are with 10 uses, 100 uses, 1000 uses, and so on. This is the real cost per use.
- webjunkie 4y ago
  I like that thinking. It also became clear to me when moving. You can actually sell good furniture that you don't want anymore, and get quite some money back. And if you are considerate in which furniture you buy, you can assume you'll also get money for it, should you not need it anymore. Thus for example, a purchase of a $2000 designer table might not be that huge, if you use it 5 years and get $1500 for it afterwards, you only paid $100 per year to have the table you wanted.
  - wasmitnetzen 4y ago
    That's ignoring capital cost, i.e. the cost of not having access to the $2000 for 5 years. It's practically zero if you are able to afford a $2000 designer table, but should be included if you're being 100% honest.
  - ozim 4y ago
    I would rather buy $200 table from Ikea use it also for 5 years no problem and when I don't want it give it away for free. It is still $40 a year. I also don't know anything about designer tables or design furniture so I probably would get ripped off on buying first and then second time when selling. In the end I don't have any patience for selling things so I would even low ball the price just to get rid of stuff. Heck even giving stuff away for free is sometimes annoying. If I would plan not to move anymore or be sure to live somewhere for 20+ years I could consider designer furniture even if I would pay too much for it :).
ehnto 4y ago
I often consider it as cost per hour tempered by some notion of utility. Some things become trivial costs when considered like this. A computer, per hour of utility, becomes fractions of cents, coupled with the notion that it is practically indispensable to me then it is a no brainer. My car on the other hand is incredibly expensive per hour, and with increasing public transit and cycling near me, its utility is also in question.
jay_kyburz 4y ago
Here is another take, when I compare two things on price, I take the price difference and apply 5% compound interest on it for 30 years. That about how much I would save if I put the money on my mortgage instead. Or when the mortgage was paid off how much it would earn in my retirement savings. Also, now I have two kids, I always think how much its going to cost my kids. Sure I could buy a $1000 phone now, or I could leave my kids $10,000 extra in the Will. :)
- kqr 4y ago
  This is a good point raised also by Deming early on in one of his books. The cost of any investment is not just the money spent, but also the risk-free rate compounded on that money over the time the investment is in use. In periods when the risk-free rate is 2 %, that is what any investment costs you in addition to the principal, as Deming put it poetically, "every day, rain or shine, even on Sundays."
- gen220 4y ago
  From what I recall, Warren Buffet thinks about things in the same way, which is one reason he’s famously stingy. It’s a blessing and a curse, because it leads to wealth but can end up in some weird end states. Like having an uncomfortable lifestyle that the money-controller can tolerate, but other members of the family chafe at. Be careful to value the compounding interest in your own happiness and the compounding value of the happiness of those around you. Through that lens, a marginal $10k (on top of an already secure retirement fund) might be worth far less than a marginal $1k investment in the happiness of yourself or your friends and family. Money is not a goal in itself after all, it exists to further our true goals in life. In this day and age it’s all to easy to get distracted by the money game, and forget what our true goals are.
- rufus_foreman 4y ago
  I would have hated for my parents to not buy something so that they could leave me money. I mean not that they had that problem, they died pretty much broke, but still. They taught me how to make my own money.
dirtyid 4y ago
As a deal hunter, I also think of "reminder you got a good deal per use". Nice dopamine hit using an item and being reminded "what a steal". I'm a cheap date.
chiefalchemist 4y ago
Helpful. But this mental model can be improved. A McDonald's meal is an expense. A mobile device, you can argue, is an investment. The device can return daily joy*. A meal is, special events with friends aside, a soon forgotten one-off. * The device can also be a distraction and a time-suck. That needs to be factored in.
France_is_bacon 4y ago
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pneumatic1 4y ago
I mostly use this for after-purchase evaluation. If I spend $80 on a pair of shoes and at the end of their life they’ve cost $10 per use, I’m not happy. If I spend $500 on a couch and by the end of its life it’s cost $0.25 per day, I’m pleased. I don’t decide beforehand exactly what value I expect to get out of it, but I know it when I see it.
- lopis 4y ago
  You're pleased with 2000 uses for a couch? Imagine paying 25 cents each time you sit on the couch.
  - ghaff 4y ago
    And this is why microtransactions mostly don't work for, e.g. content purchases. If you assume you use a couch 50% of days--because you travel, sit other places, etc. you're talking about over 10 years which seems sort of reasonable. And OK you can try to find something used or something at Ikea, but $5K isn't a completely extravagant number for a couch, especially if you own a house.
  - pneumatic1 4y ago
    Yes I do imagine that.
Tade0 4y ago
My spending habits changed considerably when I started to include the cost of real estate required in my calculations. I encountered this first in a forum discussion about boilers - someone pointed out that the largest cost component isn't even the unit itself, but all the space it takes. Anyway whenever I think of buying a treadmill, I remind myself that the actual cost is an additional €4500 just for the real estate and perhaps a gym membership would have been cheaper, but since I still haven't gotten one, perhaps it's less important to me than I think.
- clircle 4y ago
  If you don’t buy the treadmill, you don’t save money on the real estate you already own. It either goes unused or is used for a different purpose. Is this really the right way to think about the trade offs?
  - elil17 4y ago
    Makes a lot of sense if you're space constrained, could see yourself getting space constrained in the future, or value open space. Even then, though, if you needed the space for something else, you could recoup all of the real estate cost and some of the cost of the treadmill by selling it.
  - Tade0 4y ago
    It keeps my hoarding habit, passed on through generations of people who lost everything in wars, at bay.
- The-Bus 4y ago
  The extremely sad fact is that doing this calculation for storage costs in a major city means you are often better off simply throwing out or giving away the item instead of storing it, and buying a replacement when you need one.
traceroute66 4y ago
Aaah yes .... "cost per use". Its not the favourite unit of measurement of the cloud salesmen for nothing. "Come to my cloud" harks the salesman .... "look, X is only $0.000000001 a go, Y is only $0.00095 a go .... its so CHEAP". I think we know how it all pans out. You / your company ends up with an eye-watering cloud burn rate. Beware the double-edged sword as they say, "cost per use" is not the panacea ... apart from for the seller, perhaps.
- maccard 4y ago
  That only happens if you don't compare cost of use in both cases. If the upfront is $100 for the other option, you should calculate what the cost per use is at 10k/100k/1m/10m/whatever uses, and estimate which of those you think you'll hit and make the decision based on that .
threefour 4y ago
This is how I justify the purchase of guitars and bicycles.
Danborg 4y ago
Think of how many people bought RVs…. Never having been camping before! After you drop 50 grand is not the time to decide you don’t like something.
k__ 4y ago
The next step is happiness/price.
btbuildem 4y ago
You could make the argument that the phone, combined with all the extremely addictive "services" it provides, is just a piece of hardware that allows the advertisers to use you (via these services, like social media). In that case it's you, paying thousands for the hardware, to enable others to use you and the limited time you have on this earth.
- marginalia_nu 4y ago
  There's some parallels to traditional animal husbandry. On the one hand, we domesticated some cows to get milk, in another sense the cows have enslaved the farmers and gotten them work all day to pamper them like royalty, the farmers ensure there is always food in all seasons, they're made to build the cattle shelter from the weather, they go out and hunt predators, they shovel manure, they get up at ungodly hours to milk the cows, and so forth. So who actually domesticated whom?
FpUser 4y ago
Don't we already have enough propaganda.? I get it, vendors have their wet dreams of endless money stream. Has nothing to do with what I want. So far I am managing pretty good with perpetual licenses except where it makes sense (like Netflix).
cvccvroomvroom 4y ago
Similar to individual units of stock prices being meaningless on their own. TCO and ROI are far more important. For example, inkjet printers are insanely expensive per use. Generally, the larger and more expensive the laser printer, the cheaper it is per page.
RileyJames 4y ago
There was a site I saw on HN once that made consumer reviews based around a cost by lifetime of use metric. I found it quite interesting. I’m not sure if it was usable life, or how long the user kept it. Somethings don’t break, they’re just not very good, and it makes sense to replace them with a more useful version. Most things just break tho.

143 points by sergnio 4y ago

I would expect the monthly service fees to be included in the phone example. And transportation costs when going out for food or drinks. As a hiker, I have spent a lot of time calculating the cost and weight per calorie of food, and the fuel to cook it.

GJR 4y ago

The counterpoint, based on the assumption that eating out is an experience, rather than a commodity: https://bigthink.com/neuropsych/want-happiness-buy-experiences-not-more-stuff/ https://bigthink.com/neuropsych/want-happiness-buy-experienc...

uhuruity 4y ago

Seems to this ex-economist like cost per use is trying to be a crude approximation of $/util

mindslight 4y ago

There's some wisdom in the overall point, but the example of a mobile phone is completely upside down. I for one don't want to think of pulling a device out of my pocket in terms of some kind of microtransaction. Rather I want it to be a natural extension of my own mind, including running software that serves my interests rather than corporate spyware. Of course one is always able to do a post-facto "price per use" calculation, it's just an extremely myopic paradigm to be thinking in. Even $/month is too small minded - that's how salesmen push you into paying way too much and financing things. But thinking $/year starts to make sense, letting you take into account things like how long upstream software is going to be supported etc. Also yes, most everybody knows the tabs for eating/drinking out add up to a considerable amount of discretionary income. Those too are better brought into the $/mo and $/year paradigm.

RyEgswuCsn 4y ago

It should really be "cost per meaningful use" or "cost per productive use". Being able to check your news feed on your phone 60 times a day probably doesn't confer as much utility as being able to check your friends' messages 10 times a day.

JetAlone 4y ago
I don't see why you got downvoted, maybe by a resentful droog or two. This is a fantastic addendum.

x43b 4y ago

I liked the general idea but found the examples counterproductive. I personally prefer cooking whole foods at home. However, paying $14 for one meal would provide calories needed to live. I do not "need" to touch my phone 32,000 times at 2 cents a piece. 30 years from now I will hopefully retain some my experiential (expensive) travel memories but may not remember/care if I used a value or flagship phone for a given 24 month period.

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tracerbulletx 4y ago

Trying to quantify the psychological value of our experiences to do some kind of double entry booking that justifies our expenses seems like kind of a fools errand to me but that's pretty much what you'd have to do if you wanted to optimize your personal expenses. Time of use doesn't necessarily translate to value or make sense to amortize by. If I do something that makes me just slightly happier or even worse off many times, or I do something for a short time only once creating a memory I look back on for the rest of my life with satisfaction then obviously the single use expense was superior.

formerkrogemp 4y ago
> what you'd have to do if you wanted to optimize your personal expenses. Yeah, it's called budgeting and being poor. Some of us try to maximize this satisfaction and lifelong memories while avoiding incurring significant personal debt on a low salary. Tradeoffs and opportunity costs abound. Of course not everyone should or would be better off being cognizant of these costs and quantities, but some of us have to be by necessity.

slategruen 4y ago

The article falls short on the comparison part. Why is the author comparing the cost of using a phone for a couple of minute to the cost of eating out that you usually do maybe once or twice a month? The duration should be similar. Following the author's example of buying a $1000 phone every 2 years, that would cost about $9.2 every week or about two McDonalds meals every month. If I'm given the choice between the two, I'd take the McDonalds.

paxys 4y ago

The overall idea is better expressed as – value stuff based on how important it is to you vs just the dollar amount associated with it, which is pretty generic and obvious advice. Trying to simplify it down to "cost per use" or some other similar metric is pointless. Is the $3000 flight ticket that you use once worth more or less than a $1000 phone you use thousands of times or a $5 coffee you drink in one gulp? No one other than you can answer this for yourself.

leetcrew 4y ago
of course it's not possible to come up with an ironclad set of rules on how best to spend money, especially not in the space of a single blog post. but that doesn't mean it isn't worth trying. if nothing else, it helps to become more intentional about how you spend your money, which most people would probably benefit from. I personally don't find the concept described in this blog post very useful. I prefer to think in terms of annualized/amortized costs, especially within the perspective of money-stress-time tradeoffs. I could see others finding it helpful though.

nayuki 4y ago

Along these lines, I find that not many people correctly calculate the cost-per-use of their car. They only think of the cost of gasoline burned, and maybe tolls and parking. They don't think about the cost of insurance divided by the number of trips, or the capital cost of the car amortized over the years of ownership. If people thought hard about the cost-per-use of driving, then other transportation options start to look more attractive.

dataflow 4y ago
> the capital cost of the car amortized over the years of ownership How many years will I own my car? How do you know? Maybe some folks buy a new car on a regular basis, but others will keep a car as long as they can. The denominator isn't known for everyone here. And then there's inflation, recession, etc. which can make the numerator unclear too.
- AnimalMuppet 4y ago
  All true. But if you're one of the folks who regularly buys a new car, you kind of know that. If you're one who keeps a car as long as you can, you know that too. So you can make, not totally accurate calculations, but calculations that are enough within the ballpark to show you whether transit is an economically interesting alternative.
  - dataflow 4y ago
    How accurate is "enough within the ballpark" though? This isn't something where an order-of-magnitude estimate or even a factor of (say) 2 error is negligible. Can you really predict the future to within like 10% accuracy? How accurate do you think you need to be? Let's do something resembling reality. Say your subway transportation costs around $13/weekday. (I just looked up a random round-trip BART ticket for the Bay Area, in case that makes it easier for people here to relate.) Probably more like $20/weekday if you add bus and parking. Now say the drive for that is around 30mi. At $4/gal gas (pre-2022) and 30 mi/gal the driving cost might cost you $4/day just for gas (probably optimistic). Say you buy a $35k car and plan to keep it 8 years, then sell it for $5k. That'd cost you roughly $14.50/weekday in depreciation. Add that to the gas price and it's around $19.50/day. I haven't even accounted for maintenance yet (on the car side), nor for non-work rides (on the public transportation side), but so now you have ~$20/day vs. ~$20/day. How in the world do you decide? Now consider gas prices shot up > 50% in a year. And we have a recession coming and you might lose your job (less gas usage, I guess?) and so decide to keep your car longer. And we have inflation. And your car might get totaled in between... or not. And you might have random stuff come up that increase costs on each side... or not. Exactly how do you do the math here to figure out which one is more beneficial?! I'm not saying you can't do the math, but as I see it, every factor adds in such a huge margin of error into both the numerator and the denominator that the result of the computation easily becomes pretty useless. And this is before even accounting for convenience/QoL improvements that you can't put into numbers... what's the value of being able to get your kids their favorite meal, or show your friends around town, or...

dubswithus 4y ago

It’s true that Thai curry is a one use item. But have you tried eating an iPhone?

fshbbdssbbgdd 4y ago
Is a human stomach within spec for the IP68 rating?

Brajeshwar 4y ago

I got the gist of the article with a quick speed-read. I have kinda used this unknowingly for a very long time. I have also helped a lot of people make buying decisions, especially when they find the upfront cost high. My view is -- start from the cost of your use and buy it even if it is on the costlier side upfront. This is also akin to buying smaller number but of high quality item so they last longer and thus the life-time cost to usage is way beneficial than buying cheap that you need to repeat frequently. Breaking down the cost down to the number of hours use per day, and thus if a Laptop lasts 3+ years, how much is the actual cost for each hour. Now, will it "spark joy" buying a better but costlier Laptop that will last years.

XorNot 4y ago
Same for me: cost per use is helpful to get you thinking about total cost of ownership and product lifetimes. It's a really good way to evaluate how much you should pay for the second purchase of a tool - also whether the price is worth the warranty. My Bosch laser Level for example cost $150 more then the alternative, but came with a 6 year as opposed to 1 year warranty. At a total price of $600, I was buying it at $100 a year guaranteed availability. Whereas the cheaper option actually cost me $450 for only 1 guaranteed year of service.
- number6 4y ago
  And for tools: If you buy the inferior one and then break it or decide to get the upgrade, your cost will be $450 + $600. You will not overpay $150 but $450. Also better tools tend to give you better outcomes.
  - yourusername 4y ago
    With tools you can go both ways. Good tools give you better results, last longer and feel better to use. On the other hand they often cost 4x what a cheap tool would cost that you wouldn't wear out as a DIY'er. A no name hammerdrill is €50 and a boschhammer €200. Most homeowners won't wear out the no name drill drilling a few dozens holes in concrete. If you do wear it out your final costs is only 25% higher than if you went for the pro tool to start.

jeffwilcox 4y ago

Agree, to a point. This was how I justified purchasing a relatively nice stereo setup 13 years ago. Today, I look at the math, on a cost-per-day or cost-per-use angle, and I'm so happy that I went for something nice that I enjoy. I do feel like cost-per-day amortized is probably more interesting for a lot of decision making. We probably over-estimate how often we'll use a product or service.

bachmeier 4y ago

> this means you spent about $0.02 per use, 2 cents every single time you use your phone. That seems like a way better deal than the $14.05 McDonalds meal that you just bought last week What? Why would you compare a "use" of your cellphone to a really big McDonalds meal? I mean, I should stop eating because there's no way I can eat a meal for less than the cost of using a cellphone one time?

BeetleB 4y ago

This is completely backwards. Always think in absolute dollars and not in rates. $1000 is $1000 whether the cost per use is pennies or tens of dollars. Thinking in terms of rates is how people would fall for predatory installment purchases in the old days (you can have a new computer for just $2.5 a day!) The other obvious problem is looking at cost absent of a market. It's not just how much it is worth it to you, but what the competition is offering it for. I personally pay less than $400 a phone and keep it for over three years. Paying $1000 for a phone just two years is not an improvement. Edit: I spoke very dogmatically above. Using rates can be OK in certain situations where the analysis becomes equivalent to using absolutes, but it's not at all rare for rate analysis and absolute analysis to differ, and people make the mistake of using rates there. You will never, ever, go wrong by looking at absolute amounts, though - and it's usually the easier way to analyze. In my engineering undergrad, Engineering Economics was a required course. I remember a fellow student said "I often return other engineering textbooks to get some cash, but this book is more useful than most of my engineering ones." Decades later, I can say he was definitely right. All too often I see engineers making poor financial decisions based on heuristics when they're quite capable in doing the (simple) math. But a lifetime of being exposed to flawed ways of thinking of money provides a convenient shortcut.

nextlevelwizard 4y ago
>I personally pay less than $400 a phone and keep it for over three years. Paying $1000 for a phone just two years is not an improvement. Either you aren't using your phone much or you are needlessly suffering with inferior product. Wearing cheap shoes for years when you could afford comfortable high quality shoes is not a virtue. Same goes with tools we use.
- HeyLaughingBoy 4y ago
  Have you considered that other people have different needs than you? My last phone (Nokia 640) cost about $200 and I kept it for 6 years. My current Samsung A12 is better in every respect and cost about $170 through AT&T. I'll probably keep it at least 5 years. I honestly can't imagine what usable benefit a $1,000 phone would provide.

cozzyd 4y ago

By this logic, paying $10k for a day of "enhanced air" (whatever that might be) is a great deal. After all, you breathe something like 20,000 times a day.

j7ake 4y ago
It is literally how mattress and sofa companies sell their products at such inflated prices.
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r00fus 4y ago

I just amortize the cost over the useful period. $2k bed / 10y = $200/y. If that’s worth it for me to upgrade then it’s simple to make the call. We spend a third of our life sleeping so having a good bed is a worthwhile investment.

Gigachad 4y ago
That assumes the $2k bed is any better than the $1k bed. There is a lot of info proposing it’s not even better than the $500 bed but the marketing teams can easily sell it at a massive markup because people split the cost over years and use.
- r00fus 4y ago
  I don't know about newer viscoelastic foam beds, but I've had the experience of buying several standard foam mattresses (due to life event lots of family was flying in) and there is a quality difference between the lower and mid grades. One would typically try them out at the showroom - it'd be really nice if they could let you sleep a whole night on one.

yalogin 4y ago

This is going to absolute lead to price gouging because today you can only items in one segment. For example price of bread to other bread. But if you start using cost per use all of a sudden you will be forced to justify 50 bucks for a loaf of bread or 100 bucks for a peanut butter bottle, after all a jar of peanut butter lasts a long time. Yes supply and demand and competition will still exist but they will all learn and adapt.

nGaR5zKE 4y ago

Don't think of price, think of return of investment (ROI). The decision if I should buy a phone for $400 or $1000 should come after answering the question "Are the extra features for $600 worth something to me?" - for some people they'll be worth - e.g. having better quality photos of their family, or having better FPS on the high-end MMORPG. Others don't need that, they don't have a ROI on the extra $600, so should skip the more expensive one. Now, going out with an old friend and spending $100 on a night out - it's a huge ROI for some, for others not, although I think the latter wouldn't have gone out at first place. The same is valid for holidays and any kind of experiences - people will have huge ROI and will go. The one McD menu - that's where I personally will never find ROI, so can't speak about it. Even if I am starving, buying a loaf of bread, butter and some potatoes for less than $14 will give me much more ROI.

hitovst 4y ago

It drives me nuts that we don't have a printer/toner database with cost per page.

asciimov 4y ago
Back in the bad old days, when I had an ink jet in college, cost per printed page was easily in the dollars possibly even as high as fives of dollars per page. Later in college, I bought a used laserjet from the university surplus sale for $20. That little printer got me through several reams of paper before the toner went out. By that point I was in the pages per penny range.
The-Bus 4y ago
I believe a lot of commercial contracts for printers (Canon, Xerox, etc.) can be priced this way.

j7ake 4y ago

The fallacy in the article is trying to compare price of phone versus price of food. The two are so different that it makes no sense to put them in the same comparison. One should compare phones within the category of other phones. Compare food with other foods.

efitz 4y ago

There is a subtlety missing from this article. The absolute cost is relaxant as well as the cost per use. The absolute cost is very important because it relates to budgeting and total resources. The cost per use is interesting for making decisions between exclusive alternatives. Should you buy a hot tub (no)? It’s not just the initial cost but also the maintenance cost (chemicals). When you divide total cost by actual use in hours it’s clear it’s a bad deal. I often think of entertainment cost in terms of cost-per-entertainment-hour. AAA video games, for example, provide a much lower cost per entertainment hour than movies or amusement parks, for example. I often think of cost in non monetary terms as well. When you think about the hours required to maintain something per hour of enjoyment, a lot of things that you can afford all of a sudden seem like bad ideas (many kinds of pets, hot tubs, etc.) So thinking about usage in a buying decision is a very helpful tool in making good decisions, although it’s in addition to looking at whether you can afford the total cost.

pnut 4y ago
Not a day goes by, that I don't loudly exclaim "god I love this hot tub, best purchase ever" to my dog as I ease into it on my lunch break.

nikolqy 4y ago

Really interesting way of looking at things. I use my phone about 6 hours every day. That’s 2,190 hours a year. That’s a lot of time yikes, but anyways, that’s about $0.50/hour of use or about $3/day. I pickup my phone about 110 times per day. That’s $0.027 per pickup. Pretty cheap and worth it when you look at it in those terms. Streaming services, not so much. That’s the magic of marketing. I love pay as you go pricing, but when it’s realistic.

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kuratkull 4y ago

This is incorrect for many sane reasons. You don't get any value out of your phone for every use, so paying that 0.02USD is not cheap. It's like a pay-per-use subscription. Everyone who deals with investing knows that absolute money means everything - every 1000USD you spend is much costlier because it never has a chance to collect compound interest of inflation-adjusted ~5% annually for the next 30 years. That works out to 4481USD that you are never going to have.

brailsafe 4y ago

This is how I think about a lot of things, also with consideration of the absolute price, but I try not to take it too far, because you do need to just enjoy your purchases some times. I try not to view my purchases now within the broader context of my entire life of what-ifs, and accept a certain amount of risk that I'll just need to sell some stuff or take a loss if major circumstances change. When I did do this, I ended up living in a 1 Bedroom + Den, except the den was empty because I couldn't rationalize buying any mid-tier furniture, since it was likely that it would either take forever to sell, or I'd need to just toss it, but either way it would be irritating. I do consider them in the context of the year or a few years, and the depreciation on whatever it is. When you break down the cost of a car for example, with an eye for both of these extremes, it becomes very challenging to rationalize the purchase, because it almost never works out.

kqr 4y ago

A related idea is depreciation. You haven't lost $700 by buying a pair of skis. You have exchanged $700 in cash for at least $500 in a pair of skis that is now previously owned. So you might lose, say, $200 immediately for the privilege of buying something brand new. And then another $100 if we include up-front the effort to sell them to someone else. But the rest of the money is still there, in the shape of skis. As you use the skis they will depreciate in their second hand value -- this is when the money is actually lost, bit by bit. You can estimate how much the second-hand value of the skis are with 10 uses, 100 uses, 1000 uses, and so on. This is the real cost per use.

webjunkie 4y ago
I like that thinking. It also became clear to me when moving. You can actually sell good furniture that you don't want anymore, and get quite some money back. And if you are considerate in which furniture you buy, you can assume you'll also get money for it, should you not need it anymore. Thus for example, a purchase of a $2000 designer table might not be that huge, if you use it 5 years and get $1500 for it afterwards, you only paid $100 per year to have the table you wanted.
- wasmitnetzen 4y ago
  That's ignoring capital cost, i.e. the cost of not having access to the $2000 for 5 years. It's practically zero if you are able to afford a $2000 designer table, but should be included if you're being 100% honest.
- ozim 4y ago
  I would rather buy $200 table from Ikea use it also for 5 years no problem and when I don't want it give it away for free. It is still $40 a year. I also don't know anything about designer tables or design furniture so I probably would get ripped off on buying first and then second time when selling. In the end I don't have any patience for selling things so I would even low ball the price just to get rid of stuff. Heck even giving stuff away for free is sometimes annoying. If I would plan not to move anymore or be sure to live somewhere for 20+ years I could consider designer furniture even if I would pay too much for it :).

ehnto 4y ago

I often consider it as cost per hour tempered by some notion of utility. Some things become trivial costs when considered like this. A computer, per hour of utility, becomes fractions of cents, coupled with the notion that it is practically indispensable to me then it is a no brainer. My car on the other hand is incredibly expensive per hour, and with increasing public transit and cycling near me, its utility is also in question.

jay_kyburz 4y ago

Here is another take, when I compare two things on price, I take the price difference and apply 5% compound interest on it for 30 years. That about how much I would save if I put the money on my mortgage instead. Or when the mortgage was paid off how much it would earn in my retirement savings. Also, now I have two kids, I always think how much its going to cost my kids. Sure I could buy a $1000 phone now, or I could leave my kids $10,000 extra in the Will. :)

kqr 4y ago
This is a good point raised also by Deming early on in one of his books. The cost of any investment is not just the money spent, but also the risk-free rate compounded on that money over the time the investment is in use. In periods when the risk-free rate is 2 %, that is what any investment costs you in addition to the principal, as Deming put it poetically, "every day, rain or shine, even on Sundays."
gen220 4y ago
From what I recall, Warren Buffet thinks about things in the same way, which is one reason he’s famously stingy. It’s a blessing and a curse, because it leads to wealth but can end up in some weird end states. Like having an uncomfortable lifestyle that the money-controller can tolerate, but other members of the family chafe at. Be careful to value the compounding interest in your own happiness and the compounding value of the happiness of those around you. Through that lens, a marginal $10k (on top of an already secure retirement fund) might be worth far less than a marginal $1k investment in the happiness of yourself or your friends and family. Money is not a goal in itself after all, it exists to further our true goals in life. In this day and age it’s all to easy to get distracted by the money game, and forget what our true goals are.
rufus_foreman 4y ago
I would have hated for my parents to not buy something so that they could leave me money. I mean not that they had that problem, they died pretty much broke, but still. They taught me how to make my own money.

dirtyid 4y ago

As a deal hunter, I also think of "reminder you got a good deal per use". Nice dopamine hit using an item and being reminded "what a steal". I'm a cheap date.

chiefalchemist 4y ago

Helpful. But this mental model can be improved. A McDonald's meal is an expense. A mobile device, you can argue, is an investment. The device can return daily joy*. A meal is, special events with friends aside, a soon forgotten one-off. * The device can also be a distraction and a time-suck. That needs to be factored in.

France_is_bacon 4y ago

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pneumatic1 4y ago

I mostly use this for after-purchase evaluation. If I spend $80 on a pair of shoes and at the end of their life they’ve cost $10 per use, I’m not happy. If I spend $500 on a couch and by the end of its life it’s cost $0.25 per day, I’m pleased. I don’t decide beforehand exactly what value I expect to get out of it, but I know it when I see it.

lopis 4y ago
You're pleased with 2000 uses for a couch? Imagine paying 25 cents each time you sit on the couch.
- ghaff 4y ago
  And this is why microtransactions mostly don't work for, e.g. content purchases. If you assume you use a couch 50% of days--because you travel, sit other places, etc. you're talking about over 10 years which seems sort of reasonable. And OK you can try to find something used or something at Ikea, but $5K isn't a completely extravagant number for a couch, especially if you own a house.
- pneumatic1 4y ago
  Yes I do imagine that.

Tade0 4y ago

My spending habits changed considerably when I started to include the cost of real estate required in my calculations. I encountered this first in a forum discussion about boilers - someone pointed out that the largest cost component isn't even the unit itself, but all the space it takes. Anyway whenever I think of buying a treadmill, I remind myself that the actual cost is an additional €4500 just for the real estate and perhaps a gym membership would have been cheaper, but since I still haven't gotten one, perhaps it's less important to me than I think.

clircle 4y ago
If you don’t buy the treadmill, you don’t save money on the real estate you already own. It either goes unused or is used for a different purpose. Is this really the right way to think about the trade offs?
- elil17 4y ago
  Makes a lot of sense if you're space constrained, could see yourself getting space constrained in the future, or value open space. Even then, though, if you needed the space for something else, you could recoup all of the real estate cost and some of the cost of the treadmill by selling it.
- Tade0 4y ago
  It keeps my hoarding habit, passed on through generations of people who lost everything in wars, at bay.
The-Bus 4y ago
The extremely sad fact is that doing this calculation for storage costs in a major city means you are often better off simply throwing out or giving away the item instead of storing it, and buying a replacement when you need one.

traceroute66 4y ago

Aaah yes .... "cost per use". Its not the favourite unit of measurement of the cloud salesmen for nothing. "Come to my cloud" harks the salesman .... "look, X is only $0.000000001 a go, Y is only $0.00095 a go .... its so CHEAP". I think we know how it all pans out. You / your company ends up with an eye-watering cloud burn rate. Beware the double-edged sword as they say, "cost per use" is not the panacea ... apart from for the seller, perhaps.

maccard 4y ago
That only happens if you don't compare cost of use in both cases. If the upfront is $100 for the other option, you should calculate what the cost per use is at 10k/100k/1m/10m/whatever uses, and estimate which of those you think you'll hit and make the decision based on that .

threefour 4y ago

This is how I justify the purchase of guitars and bicycles.

Danborg 4y ago

Think of how many people bought RVs…. Never having been camping before! After you drop 50 grand is not the time to decide you don’t like something.

k__ 4y ago

The next step is happiness/price.

btbuildem 4y ago

You could make the argument that the phone, combined with all the extremely addictive "services" it provides, is just a piece of hardware that allows the advertisers to use you (via these services, like social media). In that case it's you, paying thousands for the hardware, to enable others to use you and the limited time you have on this earth.

marginalia_nu 4y ago
There's some parallels to traditional animal husbandry. On the one hand, we domesticated some cows to get milk, in another sense the cows have enslaved the farmers and gotten them work all day to pamper them like royalty, the farmers ensure there is always food in all seasons, they're made to build the cattle shelter from the weather, they go out and hunt predators, they shovel manure, they get up at ungodly hours to milk the cows, and so forth. So who actually domesticated whom?

FpUser 4y ago

Don't we already have enough propaganda.? I get it, vendors have their wet dreams of endless money stream. Has nothing to do with what I want. So far I am managing pretty good with perpetual licenses except where it makes sense (like Netflix).

cvccvroomvroom 4y ago

Similar to individual units of stock prices being meaningless on their own. TCO and ROI are far more important. For example, inkjet printers are insanely expensive per use. Generally, the larger and more expensive the laser printer, the cheaper it is per page.

RileyJames 4y ago

There was a site I saw on HN once that made consumer reviews based around a cost by lifetime of use metric. I found it quite interesting. I’m not sure if it was usable life, or how long the user kept it. Somethings don’t break, they’re just not very good, and it makes sense to replace them with a more useful version. Most things just break tho.