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How to Calculate the Real Expense of an Item

We’ll show you how to decide if that “must-have” item is really worth the money.

Not sure whether it’s worth blowing $200 on a new coat or a month’s rent on a new computer? We’ve got the perfect way to decide. Calculating the cost per use of an item allows you to determine the real value of an item by figuring out how much using it or wearing it will cost you every day (based on how often you think you will use it). This way you can determine if an item is really worth the money or if it won’t be used enough to justify the cost. Didn’t do so well in math? Don’t worry, you can use a calculator. Still not sure what we’re talking about? Read on to see how cost per use can make you a much savvier shopper.

Splurges vs. Steals
Let’s say you want to buy a $500 Marc Jacobs bag you’ve been eyeing. You predict that you will use this bag around 100 times a year for about five years before you get sick of it and sell it on eBay. Is it worth its hefty price tag? Well, we know what your heart is telling you, but if you followed every shopping impulse, you’d go broke. And that’s where cost per use comes into play. Using your trusty calculator, you can multiply 100 days a year by 5 years to get 500, or the total number of uses in the time period. Then divide the cost of the bag ($500) by the total number of uses (500) and you get $1. Which means, it only costs you $1 every time you wear the bag. Think you’ll wear it more? Then the cost drops even lower. Pretty well worth it, huh? Or, you could buy a cheaper bag at H&M that costs $50, which at first glance probably sounds like a better deal. But if you end up wearing this bag only three times a year over the course of five years before giving it to your younger cousin, then it cost you about $3.33 per wear. When you look at it that way, maybe investing in the Marc Jacobs bag makes more sense to you -- or maybe not. But either way, you will be making a more informed purchase by calculating the cost per wear. Bottom line: When contemplating the worth of an item, focus on value, not price.

Big Purchases
Now let’s switch gears and talk about pricier purchases, like a house. If you decide to buy a beach house share for $7,500 for the entire summer but only end up spending 20 nights there total (hey, wedding season hit you harder than you anticipated), is it still cheaper than booking a hotel room for all those nights? Let’s use cost per use to find out. Divide $7,500 by 20, and you get $375 per night. So if you can find a hotel room that you think offers you the same or equal upside to the house for less, then it sounds like the hotel is the better deal. However, if you plan to entertain a ton or like having the extra space, maybe you think the $375 a night cost is worth it -- even if a hotel room only costs $200 per night.

Daily Products
As you may have guessed, products you use every day, like milk and toothpaste, are the best investments -- even if they don’t feel like it. In general, any item you use every day ends up being a better investment than something you only use once in a while -- in purely economic terms. While it may be silly to start calculating cost per use for every bar of soap or tube of toothpaste you buy, this trick comes in handy when considering purchasing other items you use daily, like a computer or car. For example, perhaps you are considering getting a new computer, but spending $1,000 on a laptop seems like a lot of dough to drop, so you’re not sure if it’s worth it. Well, if you will use the laptop every day (which, let’s face it, you probably will) and it lasts five years, then the total amount of use would be 365 days in a year multiplied by five years to give you 1,825 total uses. Then if you divide the total cost ($1,000) by the number of uses, you get about 55 cents per day, which doesn’t seem like much now, does it?

-- Paula Kashtan