Deciding if you should buy something expensive? Looking at JUST the price doesn’t make sense. Sometimes it’s helpful to review the Cost-Per-Hour. Enter the cost and usage here:
New Phone $800 | MacBook Pro $1,800 | Porsche 911 $89,000
If you use it for 1 year, it costs $1.46/hour
If you use it for 2 years, it costs $0.73/hour
If you use it for 3 years, it costs $0.48/hour
If you use it for 4 years, it costs $0.36/hour
If you use it for 5 years, it costs $0.29/hour
If you use it for 6 years, it costs $0.22/hour
If you use it for 7 years, it costs $0.19/hour
If you use it for 8 years, it costs $0.16/hour
If you use it for 9 years, it costs $0.14/hour
If you use it for 10 years, it costs $0.15/hour
How this cost analysis works:
Let’s say I already have a computer, but I’m deciding if I should buy a brand new MacBook Pro laptop. That’s an $1,800 investment….yeesh :-/
Now that $1,800 price tag might cause some sticker shock, but what if we ran this through our Cost Analysis Calculator to figure out the cost-per-hour?
MacBook Pro cost = $1,800.
Hours used per day = 8 hours.
Years will use this for = 3 years.
We’ll use this formula for our calculation:
*NOTE* We use 300 days per year instead of 365 to account for weekends and days off.
Now we plug all the numbers into the formula, and get this:
….which translates to….
$0.25 = [$1,800] / ( x [300 days] x )
This shows us that if we use this Macbook Pro for 8 hours a day, for 300 days a year, for 3 years…..this computer actually only costs $0.25 per hour!!!!
Running the numbers through the calculator above instantly shows you how much it costs per year to operate:
If your laptop is one of the main tools you use to produce work, then this $1,800 laptop is actually very cheap!
Let’s Buy Something More Expensive:
Now let’s say we wanna buy a Porsche 911. It costs about $89,000 and it’s pretty sweet!
Now there’s nothing wrong with buying a fancy car, but let’s run it through the cost-per-hour calculator:
….which translates to….
$98 per hour= [$89,000] / ( x [300 days] x )
This means assuming we drive the car for 1 hour a day, for 3 years….it still costs $98 an hour to operate. Yikkees….
But let’s say you drive the car 4 hours per because you drive in a lot of traffic. Over the 3 years the Porsche 911 comes down to just $24/hour to operate.
However if you bought a reasonably priced used car for $25,000 and drove it the same, it would only cost $7/hour.
So if you’re deciding to buy something, run it through this Cost Analysis Calculator to figure out the Cost Per Hour first. The results are very helpful in deciding!