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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

#41

Post by BeetleB »

l33t2328 wrote: post #33
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 will use the computer for more than 400 days, so the rate is useful.

Rates are usually only good when comparing apples with apples. So if you know you'll use the computer for N days, and the alternative is roughly for the same N, then comparing rates and comparing absolute numbers is an identical analysis.

But if you're comparing using a computer for 5 years vs eating cheeseburgers over 10 years, using rates become more challenging, and is prone to faulty analyses.

My point, though, is that cost per use is not usually a helpful metric.

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

#42

Post by lvturner »

bombcar wrote: post #29
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…

For non-necessary payments I think of it in cheeseburgers. Would I rather have this five hundred dollar phone or eat a cheeseburger a hundred times?

Cheeseburger all day every day... but then I need to think about the quality of life degradation that 100 additional cheeseburgers would bring... sigh The rabbit hole never ends.

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

#43

Post by [deleted] »

x43b wrote: post #6

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…

[deleted]

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

#44

Post by hinkley »

nayuki wrote: post #10

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…

And then if you have the 'nice car' and the 'old car', you may end up favoring the old car for a bunch of activities, reducing the total use you get out of the nice car.

Also vehicles aren't lumps of gold. They rot while sitting still, even in a garage - which fewer and fewer of us do.

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

#45

Post by 2muchcoffeeman »

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.

Thinking in terms of rate can still be used to wrongly justify things to yourself. Or can be used by others to make things seem like a good deal.

E.g. I should start a new hobby because I am definitely going to keep at if for 5 years! And then you don't.

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

#48

Post by [deleted] »

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…

[deleted]

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

#49

Post by _carbyau_ »

AnimalMuppet wrote: post #13
dataflow wrote: post #11

Earlier quoted context omitted.

> 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.

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.

The problem is economically interesting is only part of the equation for getting people to make the jump. The sheer convenience of a car is priceless to many people.

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

#50

Post by hitovst »

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…

Have you seen what has happened to the market for fuel inefficient vehicles lately?
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