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Big Purchases and the Cost Per Use Model

Making big purchases (those over $200 maybe?) on hobby or entertainment type items can be a big decision that is hard to make for non impulsive spenders like me. I will usually deliberate for months and even years before I decide to pull the trigger and buy whatever I wanted to buy. I don’t deliberate because I don’t have enough money to afford it, I do. I deliberate because I wonder if I will actually use it enough to make it worth my while.

A helpful model that I like to use to consider these purchases is the cost per use model, which estimates how often one will use the item and then divides the total price by that number.

Take for example the Stand Up Paddleboard that I recently bought. It was $650, which is quite a lot of money to spend on a piece of sports equipment. Rentals are quite expensive here in Korea at $30/use so it actually made sense to buy one because I’d only have to use it 22 times before it became cheaper to buy instead of rent. So the calculation:

This year: 6 months x 1.5 times/week= 36 times.

Next year: Similar numbers perhaps?

The cost per use for this year is $18/time ($650/36), which isn’t bad for a hobby that I really enjoy doing and is good exercise. I will use it next year as well, so the cost per use will keep going down.

Of course this number assumes no resale value, should I leave Korea and sell my board. But realistically, I could sell my board for at least $300 upon leaving so the actual cost per use is even cheaper.

4 Comments

  1. Great advice! I try to calculate my costs this way as well, and it has saved me many times from making a poor choice!

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