How can you tell if a purchase is worth the money? I’ll be doing a series and offer some tips that can help you decide if buying something is a good move.
We have all had those times where we have agonized over whether or not we should make a purchase. I’ve experienced this with everything from a flat screen television to three bags of potato chips that were on sale. When those moments hit, I try to take a look at some of the following definitions to help me make that purchase decision.
Cost per use
Does the item have a low cost per use? For example, wen we purchased a new mattress set we were shocked at high price tags. One set that we wanted came with $1,000 price tag. However when we did the calculations, the cost per use was very low. The mattress came with a 20-year warranty, so with normal use, we wouldn’t need to buy a new mattress set before that time. The mattress then would cost us $50 per year. Since we would use it every single day, that costs calculates out to about 14 cents per use.
The 14 cents per day was worth it to us to have a comfortable night’s rest and a mattress set with the features that we wanted to have. A less expensive mattress set at $500 only came with a five year warranty, so the cost per use actually went up to $100 per year, twice as much.
You could argue, of course that the difference in price of the two sets could be invested in the stock market to make more than the difference in cost per use, but then you would also have to allow for other things, such as the cost of replacing a mattress every five years going up past the original $500 price tag due to inflation.
Try to calculate the cost per use, figure out how often you will use the item, the price of the item and the expected life span of the item.
This is just one way to help you make a purchase decision. Check back tomorrow for another “Is it worth it?” tip.