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The true cost of everything...

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Baiba and I are planning a trip to the U.S. next year, and with it comes the thought of buying everything. Let's face it, everything is cheaper in the U.S. than in Europe, sometimes twice as cheap. I'm salivating over the prospect of new computers, Ipods, sleeping bags and bikes. Sounds like it's time for a little Kitchen-Aid economics.

I have written elsewhere about my experience buying a six-quart Kitchen-Aid mixer that I didn't need (see “Shopping in the U.S.”). I calculated that each use of the machine cost me over $100 because I let it go after moving to Europe. Had I known the purchase was going to be so foolish, I never would have bought it in the first place. The technique of calculating the price per use or price per day for items I buy, however, might be a useful deterrent against my spending money on things I don't really need when I travel to the States. Here's how it works.

Kitchen-Aid Economics axiom: Very little is more painful to therieb than taking money out of his wallet and giving it to someone else.

Corollary 1: Major purchases are very painful on the date of purchase, but the pain quickly recedes because you get rid of the money in one shot and don't have to think about it any more.

Corollary 2: The use-value of many items can be calculated by dividing the price of the item by the number of times it gets used or the number of days it is available for use.

Corollary 3: Since it's the act of spending the money that's so painful, if I was forced to pay for a purchase on a per-usage basis I would feel more pain and think twice about the value of what I'm buying.

Let's see how this idea works out in practice taking the example of buying a new laptop computer. The first step is to calculate the cost of the machine I'm currently writing on. I bought it for about €800 in the summer of 2006. I will have a chance to replace it in the U.S. in summer 2009. So let's say three years. That means that every day I would have had to reach into my wallet and pay €0.73 per day to use this computer. That's about a dollar a day. Gads! Just think of it! Reaching into my pocket and paying $1 a day to use a computer, and a Windows box at that! Now if I imagine I wait until, say 2011 to replace this laptop, the price goes down to €0.44 per day. That's still not great, but manageable if you're trying to live efficiently.

Are there other reasons to replace the laptop? You betcha! It's a piece of crap with one gig of RAM that is running Windows XP Home Edition. It doesn't go to sleep reliably and has become really slow. Is that enough to justify spending $1 a day? I don't do any heavy computing with my machine. In fact, I could probably get by with one of those new netbooks that don't do more than provide internet access. Would my enjoyment of the computer be that much more with an Apple? Probably not. And there is one very important advantage of having an old and dumpy box: the older it gets, the less I care if it is broken, lost, or stolen, all of which are real possibilities for therieb, who is clumsy, forgetful, and travels a lot. So the “opportunity” to buy a new laptop may present itself for any number of reasons other than I just want a new one. If my box is old, so much the better. If it's brand new, I'm crying the blues.

Let's look at another example, a shiny new Ipod. I want one! Probably one with internet access, which would cost about $300. I currently have a second-generation Nano that I bought in November 2006. So in round figures it will have cost me $0.17 a day by next summer when I will have a chance to replace it. My Ipod works great, the battery life is good, so why bother? Could I live with pulling out small change every day to pay for a new one, the new computer, new bicycles, and so on?

Now here's an example of a great purchase: my €4 polyester teaching pants. I bought them in Berlin about a year ago and I'm willing to bet I wore them at least 180 days while I was teaching. They looked, well, like polyester pants, but they were OK at the snooty real-estate firm where I was teaching and showed a surprising resistance to the wear and tear my prosthesis takes to pants. I finally threw them away in a largely symbolic gesture as I left Berlin. I calculate the cost per-use of these pants at €0.02. Had I walked into a store and paid the €20 for the cheap cotton pants on offer, the cost per use would have been €0.11, and there is no guarantee the pants would have lasted longer.

I can imagine a whole world like this: every time I go to use something a little genie pops out of nowhere and demands the price of use for that day. I feel certain if I had such a genie, I would spend less. I'm also certain that I would go mad and strangle the genie. Like all good ideas, I could take this one too far. There are lots of items that for which per-use analysis doesn't make any sense. Do I really need to know how much it costs every time I squeeze that tube of toothpaste? How about that carrot? I can also easily imagine such items as condoms, bike helmets, and life jackets, which are worth whatever the cost even though they are only good for one use.

I have no intention of tracking the per use cost of everything in my life because it would take away from the most precious and expensive commodity I own: my time. Everyday items resist Kitchen-Aid economics. It's the big-ticket items that I must submit to this analysis. Every time I see the “Keine Rückmeldung (hung app)” sign on my funky old laptop, I can take comfort in the fact that with every passing day, I'm paying less per day to use the machine. Kitchen-Aid economics allows me to do something that is usually impossible: with it I can effect the past.