Ever spent weeks saving for the perfect shirt, hat or pair of shoes, and then never actually worn them?
Cost per use is one of the best ways to determine how much value you’re getting out of every thing you buy. It can help you save money.
Quality vs quantity
Say you bought a brand new pair of shoes for $150 and have been waiting for the perfect event to wear them to.
Cost per use would determine that on the first wear, your shoes have cost $150 per use. Then, the second time you wear your new kicks, they have cost you $75 per use.
Each time you wear the shoes the cost per use reduces based on the formula:
Cost per use = Purchase price/number of uses
Each time you shop, you're faced with a decision. If you want to save money, you usually have to choose between quality or quantity. While both have their merits, deciding which to go with can make or break your budget.
Quality
If you prefer quality products that will last, consider the above shoe scenario.
You're choosing to spend $150 on one pair of shoes, compared to, say, three pairs of $50 shoes.
If each of the cheap pairs lasts 12 months, you have three years worth of cheap shoes.
Your $150 pair of shoes would have to last longer than this to make them a more cost effective buy.
Three years is a long time, but by opting for quality you're hoping they last even longer than that.
Quantity
On the flip side, sometimes the perceived quality doesn’t make up for the extra cost.
Think about the supermarket. Buying in bulk can often mean you save heaps of money per use.
How much will you actually use the product? This can help you choose between quality and quantity.
Saving on subscriptions
Let's look at streaming subscriptions, which are usually a fixed monthly price.
People find streaming more accessible than purchasing songs, movies or TV shows. Libraries full of millions of hours of content are available on demand.
But the subscription model makes more sense if you're a heavy user of the product.
Say you’re paying $11.99 monthly to Spotify for their music streaming service.
You have to pay $11.99 regardless of how many times you listen to music in a given month.
If you're a heavy user, streaming Spotify for 20 hours per week, this means you're paying 15c cost per hour.
If you only listen for two hours per month, you're paying $6 per hour.
How can you track the value you're getting from your money?
Keep tabs on how often you use the service you're paying for to help figure it out.
About that gym membership...
Same goes for the gym.
If you’ve been paying for a gym membership thinking it will motivate you to wake up early and get into shape… try again.
Gym memberships are generally one of the least valuable when it comes to cost per use.
The cost of some gym memberships ranges between $40-$100+ per month.
People think they'll use their gym memberships more often than they do. Research shows they expect to work out 9.5 times per month, but only make it through the door 4.17 times.
A $50 monthly gym membership you use for or five times each month makes each cost per use more than $10.
For those gym junkies getting a workout in most days, cost per use for a $50 monthly membership becomes roughly $2.
As for your car
Is your car sitting in the garage and only used on weekends?
Add up how much you spend on registration, insurance, pink slips and petrol. (If you have a car loan, count your repayments in too.)
Owning a car in Australia can be expensive. Other options such as renting a car on the go or ride sharing become an attractive alternative.
Don't forget public transport. Compare the cost per trip between Point A and Point B to see which mode of transport is cheapest.
Cost per use can help you work out how much your purchases actually cost.
You might think you're getting more value than you actually are, and could free up extra room in your budget.
