Time to read : 4 Minutes
The world has changed over the last two decades. Purchases that were once occasional have now become part of our everyday lives, and just about everything feels ‘shoppable’.
There’s a solution to every problem, and everywhere we look there’s a new product to fix the little annoyances we face in life. While it’s so easy to just ‘add to cart’, it’s important to consider whether the items we buy actually deserve a place in our lives.
Enter: the ‘cost per use’ method.
What is the cost per use method?
It’s estimated that we now buy four times as much clothing as the year 2000, and we have devices and appliances for just about everything – but to what end?
The cost per use method prompts you to work out what an item costs to use, or wear, when considering whether to buy it. With many products becoming more affordable over time, it’s easy to overconsume simply because you can.
But regardless of whether something was $50 or $500, if it rarely or never gets used or worn, you were probably better off without it.
Looking at how much something costs from a per use perspective helps you understand if the price you’re paying ‘fits’ into your everyday life.
While something that’s $100 might be affordable to you, the cost per use approach prompts you to consider whether you’re really going to get value out of it. $100 for something you use often is great. $100 for something you only use once or twice is something else entirely.
Examples of the cost per use method
Item and cost | Use context | Cost per use |
Brown coat: $500 | It became your main coat, worn 5 days out of 7 during winter months (June, July, August and September). Total uses: approximately 80 times per season. | Cost per wear: $6.25 |
Slushie machine: $200 | You use it occasionally during summer months, but you find it takes up bench space so you put it away, and don’t want the kids using it too much because of the sugar content. Total uses through summer: 8 | Cost per use: $25 |
How to work out cost per use or cost per wear
To work out an item’s cost per use or wear, take the purchase price of the item and divide it by the number of times you use it or wear it in a given period. Of course, we can’t capture a lifetime of use, but as an example, you can work out the number of uses in a year.
You can use this calculation when deciding whether to buy something to see how the cost fits into your day-to-day life. It can also help you to reflect on past purchases. Looking at your purchases with the cost per use method can show you where you’re trying to justify buying things you really don’t need or want.
Be aware: we often justify purchases by saying we’ll use them all the time when we won’t. This is why it’s important to analyse your past purchases using the cost per wear method as well, so you get an understanding of how much you’re actually using in reality.
The trap of estimation
When using the cost per use method to work out a potential purchase, we often overestimate the number of times we’ll use or wear an item to justify buying it.
We may convince ourselves that we’ll use it more than we actually will to feel better about spending the money.
In doing this, the cost per use calculation is manipulated to make an expensive product seem more reasonable.
This is common with emotionally-driven purchases. The emotional flooding we experience during a purchase switches off the rational part of our brain that we might use for effective cost per wear calculations. This means we’re more likely to fudge the numbers just to make the purchase fit.
To use the cost per use method effectively, we need to slow down our purchase decisions and give ourselves time to really consider how much use or wear we’ll get out of an item.
Slow down your decision making
Here are some ways to buy some time before making purchases:
Install a time delay between seeing an item and buying it. For example, 24 or 48 hours, or even a full week, month or pay cycle for larger items.
Deploy ‘speed bumps’ or obstacles that you have to clear before you’re allowed to buy. For example selling an item on Marketplace, getting rid of 3 things, or completing a project or task you’ve been putting off before allowing yourself to buy.
Apply redirects for your purchase sequences to break the cycle of seeing, justifying and immediately buying.
💡Taking a photo of an item or adding it to a wish list can close the loop of seeing and wanting something, in a way that doesn’t end with a purchase. This allows you to step out of the purchase process and make a more informed decision at a later date.
Bottom line
The cost per use method can be extremely helpful in understanding the hard day-to-day cost of a purchase in the context of your life. But it can also be used to justify spending more than you’re comfortable with.
Try tracking your uses and wears of key items to understand how much you actually get out of the items you buy. Look at the numbers and use them to make smarter, more informed choices with future purchases.
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Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
