Price Is Not Cost: Working Out What Things Actually Cost You

A 200 coat worn 300 times costs 67p a wear. A 40 coat worn 60 times before falling apart costs the same 67p a wear, and you buy five of them.

Price told you one was five times the other. Cost told you they were identical. Price and cost are not the same thing, and the gap between them is where most bad purchasing decisions live.

The basic calculation

cost per use = (price + running costs − resale value) ÷ total uses

Three of those four terms are routinely ignored.

Running costs are the ones that arrive after the purchase: servicing, consumables, insurance, subscriptions, storage. A printer’s cartridges frequently exceed the printer. A cheap coffee machine tied to expensive pods is a different proposition from its shelf price.

Resale value is money that was never really spent. It changes the answer substantially for cars, bicycles, tools, cameras and instruments, where the second-hand market is deep. A 1,200 bike sold three years later for 600 cost 600, not 1,200.

Total uses is where honesty enters, and it is the term that ruins everything.

The honest-use problem

This calculation is very easy to abuse, and nearly everyone abuses it the same way: by estimating uses from intention rather than from history.

The 800 bike bought to cycle to work every day. The bread maker. The gym membership. The camera bought for the trip. All of them look excellent at the imagined use count and absurd at the real one.

The fix is to use what you have actually done, not what you plan to do. If you cycled eleven times last year, enter eleven. The number will be uncomfortable and it will be correct.

Most people, checking their estimates a year later, find they were optimistic by a factor of two or three. That personal correction factor is worth more than any individual calculation, because once you know your own bias you can apply it to everything.

Where it genuinely changes decisions

Things you use constantly. A mattress used 2,500 times over seven years. A desk chair. Shoes you wear to work. Paying considerably more is usually the cheaper choice per use and always the more comfortable one. This is where the well-known Vimes boots argument actually holds.

Things you use rarely. A carpet cleaner used twice a year, a tile saw, a roof box, a pressure washer. Renting or borrowing is often dramatically cheaper, and storage is a real cost that never appears on the receipt.

Tools. The old advice to buy the cheap one and replace it with a good one when it breaks is a cost-per-use argument in disguise, and it is a good one: it uses the cheap tool to measure your actual usage before you commit.

Subscriptions. Divide the annual cost by the number of times you actually opened it. This is reliably the most sobering calculation on the list, and it is the one that finds the most money.

Total cost of ownership

For larger purchases, cost per use is not enough, because the running costs dominate and vary enormously between apparently similar options.

A car is the clearest case. The purchase price is frequently under half of what it costs you over five years. Depreciation, insurance, fuel, servicing, tyres, tax and parking make up the rest, and depreciation alone usually exceeds fuel.

Two cars with the same sticker price can differ by thousands a year once those are counted. A three-year-old car has already taken the steepest part of the depreciation curve, which is why it is so often the better value even at a higher price than a much older one.

The same logic applies to houses, where maintenance runs about 1% of value a year, and to any equipment with consumables.

What it does not capture

Whether you needed it. A very low cost per use on something you did not need is not a saving. This method compares options after you have decided to buy. It cannot tell you whether to buy.

This is worth stating plainly because the calculation is easily used as a justification engine. Finding that a purchase works out at 40p per use feels like permission, and it is not.

Quality of experience. Two chairs at identical cost per use are not equivalent if one gives you back pain. Some of what you pay for is not durability, and the calculation is blind to it.

Cash flow and opportunity cost. The cheaper-per-use option often costs more today. If paying 200 now means carrying a balance at 22%, or means the emergency fund is gone, the arithmetic changes completely. Money spent on one thing is unavailable for another.

Uncertainty. A five-year lifespan is an estimate. Things get lost, broken, outgrown and superseded, and tastes change. The longer the assumed life, the more the calculation is really a forecast.

One habit worth forming

Before a significant purchase, write down the number of uses you expect. Then look at that note a year later.

You will find out whether you are the sort of person who uses things, and by how much you tend to overestimate. That single number, applied to every future decision, is worth more than any individual comparison you will ever run.