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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

#71

Post by [deleted] »

sacred_numbers wrote: post #61
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…

I see so many people talk about the Boots theory, and while I don't disagree, there's another side to the story. What if you buy a really nice pair of boots that will last a lifetime and then a couple years later you move to a beach town where you wear sandals all day? Or what if you get paralyzed and have no need for durable shoes? The point is that life is unpredictable and both your circumstances and preferences c…

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

#72

Post by lelanthran »

godelski wrote: post #54
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…

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, screencasting to a TV, using the device as a mobile hotspot, testing software you write for phones ... and a few more less frequent things (Like using employers paging app, employers internal systems) ... then you don't get any additional value spending more than $400 on a phone.

Don't ask me what you can do with a phone that costs more, because I haven't yet seen anyone do something on their phone that my [1] Wordle, for example, is insanely popular right now.

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

#73

Post by incone123 »

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…

I consider maintenance, insurance etc. But I weigh that against it takes twice as long to get to work by bus. I work 13 hour shifts so travel time is important to me.

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

#74

Post by lelanthran »

mise_en_place wrote: post #65
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. $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!) It depends on the opportunity cost. If you can get a house for 3600 a month, and the house appreciates in value in excess of the discount rat…

> It depends on the opportunity cost. If you can get a house for 3600 a month, and the house appreciates in value in excess of the discount rate, then it's worth it to purchase that house.

To add to this, there is also the opportunity cost of buying the more expensive option because the difference is only $1/day. Spending $365/year on the more expensive option is missing out on getting some other item[1] for $365/year.

Like I keep telling people who ask me why I don't pay for $FOO instead of using $BAR (where $FOO is "Windows", or "Office365", or some development tool and $BAR is OpenOffice, Vim/Emacs, git from the cli, Linux, etc).

The answer to any "Well $FOO only costs you $10/m, and if you are a professional using it as part of your profession, then you should be able to afford it" is "I can afford lots of things, doesn't mean I am necessarily going to buy them".

[1] Sticking with the phone example, taking a phone that works out to be cheaper by $365/year means that you could spend the extra money for redundancy (if your phone breaks, simply buy a new one in 30m), you get a drawing tablet (suddenly, whiteboarding during zoom meetings saves 30m - what's your hourly rate?), or you put it into a index tracker or stock or debt, and get a positive return.

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

#75

Post by lelanthran »

hitovst wrote: post #50
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?

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

I have not. What has happened? Have SUVs stopped being the most popular class of passenger cars being sold?

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

#76

Post by nikolqy »

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.

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

#77

Post by BeetleB »

mise_en_place wrote: post #65
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. $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!) It depends on the opportunity cost. If you can get a house for 3600 a month, and the house appreciates in value in excess of the discount rat…

> It depends on the opportunity cost. If you can get a house for 3600 a month, and the house appreciates in value in excess of the discount rate, then it's worth it to purchase that house.

In this case, the absolute value analysis yields the same result, so it doesn't really "depend". I'm not saying you will always go wrong thinking in terms of rates. I'm saying you'll never go wrong thinking in terms of absolute values.

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

#78

Post by lelanthran »

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…

> 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.

They do think about this, which is why the second-hand market for cars is so healthy.

To be accurate, you should restrict your assertion to those people who only buy brand new cars, which is necessarily a far small population of people who buy second-hand.

There are more people who think about this (they buy second-hand) than people who don't.

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

#80

Post by kuratkull »

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.
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