When we purchase something and use it frequently we comment that we “got our money’s worth” out of it, as the cost-per-use has plummeted. Weigh the frequency of use against the purchase price when considering if something is worth buying.
Photo by Joe Marinaro.
Financial blog Personal Finance by the Book highlights how cost-to-use analysis plays out in different situations. For example, when purchasing a new vehicle it makes little sense to pay extra for features that are infrequently used:
Should you pay an extra $US5,000 for that 7 passenger car? It depends on how often you actually need those extra seats for the life of the vehicle. Obviously, if you have a family of seven you need all the seats you can get, but if you only use those extra seats one week a year for your annual vacation, you are paying $US1,000 for each of those weeks (assuming you keep your vehicle five years). Because a seven passenger mini-van rents for about $US500 a week at Enterprise, you may be better off saving your $US5000 purchase price and renting that 7 passenger vehicle when you need it.
Check out the full article at the link below for more examples and tips for applying cost-per-use analysis to your purchases.