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Dont think of price, think of cost per use

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Re: Dont think of price, think of cost per use

#121

Post by clircle »

Tade0 wrote: post #118

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 estat…

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?

Re: Dont think of price, think of cost per use

#123

Post by zhte415 »

Spivak wrote: post #27
BeetleB wrote: post #24

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, bu…

You’re not really disagreeing with the author. * $/use isn’t really a rate in the way you’re describing with predatory financing. It’s not a cost hiding measure but one of many ways of estimating utility. Optimizing for price alone and not $/utility will bite you for lots of goods. * A $400 phone used 100 times is $4/use and a $1000 phone used 100 times is $10/use so markets still have plenty of an effect.

Those seem expensive options. Why not take your phone out of your pocket more to check the time more? That would increase your use, and thus reduce the $/utility.

Re: Dont think of price, think of cost per use

#124

Post by maccard »

traceroute66 wrote: post #119

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 f…

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 .

Re: Dont think of price, think of cost per use

#125

Post by sokoloff »

lelanthran wrote: post #72
godelski wrote: post #54

Earlier quoted context omitted.

I don't think you're necessarily disagreeing. There's a factor that neither you nor the author are considering: value/$. Author is implicitly assuming that the higher cost equates to a higher value (clearly this is never a linear relationship). So my friends call me the cheapest person they know, but I also think like the author. If there is something I am going to use a lot and the added value helps me, then I'll sh…

> With your phone, if all you care about is texting and making calls, yeah, you're not getting any added value paying more. If all you care about is texting, making calls, playing the occasional game[1], browsing the web, doing mobile banking, listening to music, watching videos, using social media, responding to work emails, viewing the occasional PDF, word processed document or spreadsheet sent over email, screenca…

My main phone is an Xs Max that I bought around 15 months old. I just replaced the screen on it because I finally got unlucky on a drop that broke it. (I replaced the battery as well while I had it apart.)

The only real reason I’d consider upgrading is for the better camera on the newer phones. I think I paid $400-450 for that phone 2.5 years ago and just spent $125 on a screen and battery for a phone that will likely be great for another 1.5 years. Under $600 for 4 years seems pretty good.

While I was waiting on the screen to arrive, I bought a 2020 iPhone SE for $150. It’s perfectly usable and in some situations, I prefer the smaller form factor. (I hate the loss of FaceID.)

My wife’s 13 is better for sure, but only really noticeably in the camera.

Re: Dont think of price, think of cost per use

#126

Post by wasmitnetzen »

webjunkie wrote: post #104
kqr wrote: post #87

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…

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 afterwa…

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.

Re: Dont think of price, think of cost per use

#127

Post by lelanthran »

Tenoke wrote: post #110
lelanthran wrote: post #72

Earlier quoted context omitted.

> With your phone, if all you care about is texting and making calls, yeah, you're not getting any added value paying more. If all you care about is texting, making calls, playing the occasional game[1], browsing the web, doing mobile banking, listening to music, watching videos, using social media, responding to work emails, viewing the occasional PDF, word processed document or spreadsheet sent over email, screenca…

I read on my phone that has 525 dpi and it seems to make a difference (I only found myself comfortable reading all books on my phone on my previous one which had similar dpi without noticing). Your $400 phone likely has half the dpi, worse screen in general and worse camera for a start. Just because you don't benefit from a better phone it doesn't mean nobody does. And if you are bringing up games, wordle is an odd c…

I've played Diablo Immortal on my phone. As far as I can tell, it worked fine.

I used Wordle as an example of a game played by the masses. There are orders of magnitude more people who play things like Wordle than things like Diablo Immortal, hence my reason for using it as an example.

But still, gaming was poorly specified on my part; I should've mentioned that a $400 phone can play AAA titles, not that a $400 phone can play casual games.

Regarding the 525 dpi, you're correct, no $400 phone will have that. People who have trouble viewing a 300 dpi screen will have to pony up for a more expensive phone.

Where we've apparently landed is that $400 will let you play even AAA titles, but will not buy you 525 dpi.

Re: Dont think of price, think of cost per use

#128

Post by fennecfoxen »

allgreed wrote: post #106
BeetleB wrote: post #66

Earlier quoted context omitted.

> With your phone, if all you care about is texting and making calls, yeah, you're not getting any added value paying more. If that's all you care about, paying $400 like I do is silly - you can get it much cheaper. The $400 phone I get takes fairly good photos (it's one of my main criteria in deciding on phones). Sure, if I want great photos, I'll have to pay more. I've decided that an extra $1100 over 3 years is no…

I’m not sure I follow your argument about ESPP. It’s almost always the case that maxing out your ESPP contribution is a good idea instead of getting the money earlier and investing it in something else. It might even be worth getting a loan and still maxing out the contribution should you require more cashflow (because 10% loan is still cheaper than missing out on ~90% return). But the t return is limited to your max…

Yeah, the standard ESPP I’ve seen (twice now) is essentially a series of call options (at 6, 12, 18 and 24 months in the future). If the option is not 15% in the money at vesting, the plan resets and it is replaced by one that is in the money.

Look at the price for actual call options at these intervals and you will have an approximate idea of the value of this financial instrument. It’s probably substantial, almost certainly more so than the opportunity cost on your money (unless you must meet critical expenses or pay off credit card debt). And if you always sell the same day you buy, the risk is quite low (if the plan is at its bottom and the stock price falls 15%, basically, but most ESPP dates are just after earnings which limits the types of surprises you’re in for).

Re: Dont think of price, think of cost per use

#130

Post by pnut »

efitz wrote: post #57

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 actua…

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.
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