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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

#151

Post by jenny91 »

kqr wrote: post #84
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…

> Always think in absolute dollars and not in rates. Technically, you should think in probability weighted log-dollars to maximise your economy over the long term. (The Kelly criterion.) In some cases this is equivalent to thinking in terms of fractions of your total wealth -- this is how the Kelly criterion is popularly presented. For small ("everyday", as Bernoulli put it) amounts, this is equivalent to absolute do…

That assumes your utility of money is logarithmic in amount, which is not necessarily true.

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

#152

Post by aidenn0 »

lelanthran wrote: post #127
Tenoke wrote: post #110

Earlier quoted context omitted.

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…

Yes, if you want crazy hight DPI and a SOTA camera you pay more than $400.

I don't play AAA games and I need a camera good enough that I can read text I've taken a picture of with. I haven't spent over $200 on a phone in about 10 years (I think it was the NA version of the HTC One X).

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

#153

Post by The-Bus »

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…

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.

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

#155

Post by FpUser »

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).

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

#156

Post by ghaff »

lopis wrote: post #117
pneumatic1 wrote: post #111

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.

You're pleased with 2000 uses for a couch? Imagine paying 25 cents each time you sit on the couch.

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.

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

#157

Post by robocat »

OJFord wrote: post #132
robocat wrote: post #94

Earlier quoted context omitted.

> You can just order a taxi? A trip to my parents and back is ~$180 by Uber - I go more than once a week so that would be way more than $10k per year. And an Uber doesn’t come with a tow ball: I often use a trailer out there or back (I mentioned firewood, but also dump runs and moving stuff from/to storage). The Uber has a variable wait-time, and is not useful if I have to go anywhere urgently, and an Uber often valu…

> A trip to my parents and back is ~$180 by Uber - I go more than once a week so that would be way more than $10k per year. So you do the 'cost per use' calculation, and probably you find that car ownership is a better deal than a taxi? Nobody's saying it's a way of showing a purchase is always wrong! > And an Uber doesn’t come with a tow ball: I often use a trailer out there or back (I mentioned firewood, but also d…

It feels like you are pushing a political agenda. It seems to me that you are not responding in good faith.

> tows, but you could hire a car for the weekend.

I already commented “hiring a car instead, which is ridiculously more expensive and extremely inconvenient (at least where I live).”.

I gave examples where hiring a car doesn’t make sense (urgency, emergency, optionality). There is no local car hire, so getting to and from a car hire would cost me significant time.

I think your point is that sometimes people just go with the easiest option, without thinking of “cheaper” alternatives. I own a car, but I can’t use it at present, so I am currently forced to use alternatives. I can categorically state that the costs of other options are extremely high for my situation. The real costs are not financial, they are the things I can’t easily do because the alternative options usually have constraints that suck.

Edit: Hiring a car to do a load of wood makes no financial sense: I would be better off just buying wood instead. Moving wood with my own car makes financial sense because the marginal cost of using my car is low, and the wood and it’s transport mostly only costs my time. Converting my time to wood makes sense in my context for some friends and family.

> So you do the 'cost per use' calculation

No. My original comment is that looking at costs alone is silly. The value you get also matters - in my case the high value of things that my own car gives me that alternatives do not give me (or alternatives could, at a stupidly high financial/time/other cost).

The example I gave is the ability to rush out to my parents or help my friends after midnight, which has a very high optionality value to me. Uber is expensive, incurs delays, and causes my precious time to be wasted. Perhaps you could suggest I hire a car for 365 days to cover that /sarcasm.

I just don’t understand your condescending tone. I think it is obvious that many people use cars because the value they get far outweighs the costs, and many people have looked at the alternatives and found they don’t stack up for them. I am one of those people. Why persist on suggesting alternatives to me.

Essentially I think the original article is a really flawed way of looking at things. I use my T-shirt for 16 hours a day, so I should pay thousands for the perfect T-shirt?

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

#158

Post by kqr »

jenny91 wrote: post #151
kqr wrote: post #84

Earlier quoted context omitted.

> Always think in absolute dollars and not in rates. Technically, you should think in probability weighted log-dollars to maximise your economy over the long term. (The Kelly criterion.) In some cases this is equivalent to thinking in terms of fractions of your total wealth -- this is how the Kelly criterion is popularly presented. For small ("everyday", as Bernoulli put it) amounts, this is equivalent to absolute do…

That assumes your utility of money is logarithmic in amount, which is not necessarily true.

Common misconception. It does not.

It makes only two assumptions:

- Growth compounds, and

- More is better.

Under those two assumptions, log-dollars is what you need to optimise.

By coincidence, logarithmic utility of money would also lead to the same conclusion, but that's mathematical happenstance, and not something going into the model.

----

Another way to put it: the Kelly criterion prescribes logarithmic utility. It says that to maximise growth (under above assumptions) you ought to adopt logarithmic utility. If you don't, you get worse results.

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

#159

Post by ghaff »

OJFord wrote: post #63
robocat wrote: post #55

Earlier quoted context omitted.

> not many people correctly calculate the cost-per-use of their car Cost-per-use by itself is fairly meaningless, costs needs to be compared against value-per-use. What is the worth of: a visit to my friends; taking a surfboard to the beach; taking a load of firewood to my parents; an emergency 2AM visit to a suicidal acquaintance; taking my nephew and his friends to the skatepark; helping a friend move; picking up a…

> Cost-per-use by itself is fairly meaningless, costs needs to be compared against value-per-use. That implies the only alternative is not doing things? You can just order a taxi? I think for many car users the total 'cost per use' of their car exceeds the average taxi fare they'd pay for those journeys. Nevermind considering public transportation.

>That implies the only alternative is not doing things?

The option is often not to do things. Leave aside the fact that I live in a semi-rural area. Even if I lived closer into the city, there are a bunch of outdoor activities (hiking/kayaking/etc.) that I do which require a car. Could I rent? In some cases with the caveat that the vehicle may not have an appropriate rack to transport a boat for example. And I probably can't just wake up Saturday morning and decide to go somewhere.

My observation is that people do indeed tend not to do activities that have a lot of friction for them. And it goes both ways. I'm very selective about making the effort to go into the city for evening activities.

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

#160

Post by marcosdumay »

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…

Two things that change between phones that are still relevant are screen and camera quality. There is loosely a correlation between those and the total phone price.
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