Give Me Back My Five Bucks

Consider the cost-per-use of each purchase

Earlier last year, I wrote an article for Moneyville about considering the “cost per use” method whenever you are looking at buying something.

Personally, when I’m out shopping and thinking about buying something, I first find that I’m asking myself whether the item is a want or a need. Then, I quickly look at the item’s “cost per use” to see if it’s really going to put value in my life. It’s obviously not the only thing I do to determine whether I should buy something, but it definitely helps to keep me thinking about long-term value.

This is something that I think a lot of PF bloggers do, but maybe it’s not something that many other people think about when they go shopping. I got a lot of “interesting idea” or “I never really thought of it like that” comments. Then, there are some bloggers who were vocal about the original Moneyville article and called it “junk advice.” Fair enough, we’re all entitled to our own opinion. :)

This blogger said:

Krystal blew $275 on a purse but justifies it as costing only $0.25 a day – using the same logic that makes Rent-to-Own furniture seem cheap. I’m not saying people can’t splurge. But she’s wallowing in debt. She is a serial splurger. And she doesn’t even calculate the implicit interest cost in the article.

Note: I left out the part in the paragraph about how this blogger felt about my “mid-life-crisis-esque romp in Euro-Utopia” – which he apologized for 3 months later at CPFC12. :) 

With the cost per use concept, you take the purchase price of an item, and divide it by how many times you will use it. For example, with the purchase he’s referring to, I bought a Roots purse for $275. This was not a justification for an impulse purchase – I spent three months debating whether I should spend such a large amount of money on something like a handbag (to date, it’s still the most I’ve ever spent on a “fashion” item).

Calculating the cost per use of this purse, I realized that if I used it every day for just two years, I would only be paying 37-cents per use. Four years later, I’m still using the same purse every day (pictured) – bringing my cost per use down to less than 19-cents.

To me, the cost per use justified the price. So instead of buying a cheap $30 purse, I decided to save up for the more expensive one that I liked a lot more than the cheap one (which definitely wouldn’t have lasted 4 years of everyday use).

Of course, there are flaws to the cost per use method:

  • It won’t help you with every purchase. For example, take a look at your home. Many families have an extra guest room. But if it costs you an additional $30,000 on the purchase price, and it’s only used six or seven times each year, is it really worth it? Well, of course that’s debatable. Having an extra room in your home usually means you will command a higher price when it comes time to sell (and it also might be easier to sell). But in exchange, you will have higher payments each month, and you will also pay more interest over the life of the mortgage. 
  • Most people tend to overestimate the amount of times they will actually use the item in order to justify the purchase. Don’t pretend like you’re going to wear those $600 shoes every week when you know you’ll only end up wearing them a few times each year – at most. :)

Putting the cost per use logic aside, you still need to be able to afford each purchase before you buy it. If you don’t have the cash saved up for it, you can’t afford it. And if you can’t afford it, that means no matter how good a deal might be, or how many times you think you will end up using it, the cost per use is irrelevant.

Do you ever calculate the cost per use before you buy?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


  1. cjb says:

    I have to chuckle….I have a couple hundred dollar purse that I paid a little over 8 bucks for on ebay. It needed cleaning, which cost me 40 bucks. I have another coach purse I got at a consignment shop for 40 bucks, turns out it’s worth a couple hundred bucks. I couldn’t ever justify spending more than 60 on a purse…ever. I love the classic lines of the one pictured above and that’s pretty much what a couple of my purses look like.

    In my world $275 is gorceries for the month almost. It’s a weekend away (which my husband and I haven’t done since we started our journey a year ago).

    $275 will get us up and back to my in laws and my MIL is 80 and we try to spend as much time as we can with her.

    $275 is the cost of a new cell phone, not the one I dream of, but one that would work if I dropped mine and since I do prepay and buy my phones outright and don’t pay 10 bucks a month for insurance ($120 a year) I have my own insurance.

    I do work out at home using DVD’s which saves me $60 bucks a month not going to 24 hour fitness (boy that is a nice gym) and I preorder workouts from Cathe and I do justify those purchases by saying, but I don’t pay for a $60 dollar membership at the gym. I work out 5 to 6 days a week. A gym membership would be 2.50 to 3 bucks a day if it was something I was paying for. I usually budget $20 bucks a moth for a new dvd. If I figure in 25 (average video I purchase) / 2 (a day) I’d only have to do that video 12 times…yeah…that’s too much thinking. But, the fact that I’m not stuck in some contract and can skip a month of buying if I want to spend the 20 bucks on something else or the fact that I don’t have to drive to the gym, which is also saving me money and excuses…my husband seems to have no issue with me buying a workout or workouts….

    As far as having a bigger home…I can’t tell you how much and how often I wish I had one more bedroom. My DH and I live in a one bedroom condo that I purchased when I was single….8 years ago. Errr…An extra room would be so worth 500 bucks to me right now….lol.

  2. Michelle says:

    I absolutely use the cost-per-use calculation when it comes to some more expensive purchases, and I have yet to be proven wrong. It’s the responsible thing to do.

    And BTW I used that logic for my expensive Roots handbag and my Coach purse. Five years later they haven’t let me down, and I don’t foresee needing another purse for another few years still.

  3. SP says:

    It is a useful tool – i tend to use it more to talk myself OUT of purchases of things that I don’t wear all that often but think that I want. You still have to consider the purchase price, obviously, but once you know you can afford it, you should consider the value it brings you!

    (sasya the “blogger” who just bought a new bag to carry my work laptop in at > $100!)

  4. Vanessa says:

    OMG I forgot about that “romp in Europe” comment. I’m glad he apologized for it at least :/

  5. I don’t calculate cost-per-use to decide if I am going to buy something (then again I buy very few wants.) I do calculate it for fun (did you know that my $150 dollar runner that are 5 years old are down to $0.12 per use? I’m hoping to make them last another 2 years at least making that $0.09 per-use.) Do I know how to have a good time of what?

  6. I do look at the cost per use, but I have to put a time limit on it in order for it to make the most sense. You never know how long something will last, especially these days, so I think capping something with an educated guess is good for me.

  7. I tend to look at the cost per season, i.e. if I buy a new spring/summer/early autumn jacket (this time of year can have a lot of ups and downs in Norway :-P) I think about the quality of the jacket, and how many years I might be able to use it. So far so good. I bought an expensive down jacket for winter 4 years ago, and I`ve worn it every winter, and it still looks as new, and I`ll probably use it for at least 2 more years (it is a bit big, I lost weight a couple of years ago) so perhaps, when I have a decent salary, I`ll buy a new one. But also when I buy shoes, I have this strategy. I buy more expensive shoes with good quality, and then I wear them year after year!

  8. Ed says:

    I don’t dislike the idea of ‘cost-per use’ but it doesn’t take into account the pleasure or quality derived from each particular use.

    I bet I could find a generic $15 thrift store bag/purse that turns out a lower cost per use than a designer bag – but if you’re a fan of purses, I’d wager that the designer bag yields a little more dopamine with each use.

    Then again – if you need a purse but aren’t particularly passionate or interested in purses – the generic bag might do just fine.

  9. Dan says:

    Krystal, big fan of your blog here. I agree with your logic and I think the same way when making purchases. However, you don’t need to justify these purchases to anyone other than yourself. We all have a splurge purchase we have made, some good and some bad. My wife thinks nothing of spending $200-$300 on a purse which I dont understand, but I have rented a sports car for 4 hours ($450!) which she doesnt understand. A “romp in Europe” is nobody’s business but yourself, and I’ve always said if its affordable and you’ll get great satisfaction out of it then go for it :)

  10. lindsay says:

    What is it that makes people think they can judge another based on how they spend their money? Like, obnoxiously rant about the yearly finance decisions of someone else? Just because that person wouldn’t make that decision doesn’t mean it’s not right for another. Blech.

    I totally think about cost per use with my clothing. It makes me buy clothes that are much more versatile and that I can wear on weekends and to work (and encourages me to wear work items in social settings). I bought a thrift store pair of tall boots and have literally worn those suckers out – the cost per wear is probably 1/8 of a penny, but now I know I’ll get a lot of use out of my next tall boots and that it’s worth spending more money on a quality pair.

  11. natalie says:

    I wholeheartedly agree to your article about using the cost-per-use strategy on deciding any mid-high level purchases. I bought an Aritzia winter coat for 350 dollars 2 winters ago. I am absolutely in love and do not regret about the purchase. Some people asked about my coat, and realized how much it costs, they all frowned their eyebrows and think i am a materialistic person who is willing to spend that much on a winter coat.

    But on the flip side of the story is that during my entire life in Canada, before this winter coat, all my previous winter coats cost less than 70 dollars with tax, and most of them broke very easily (one of which i got plenty of complimentary, but the zipper and the button of the coat busted only 1 winter of use). It also took me 6 months of scouting on various different coats to decide. Now with my new winter coat, i feel so toasty even it’s -40 degrees (oh trust me, i live in a city that had -40 degrees Celsius for a week and public transit). It’s all about perspective, and if you are going to use the item every day, cost-per-use makes sense. Sometimes cheap = good quality.

  12. Marianne says:

    Natalie I completely agree with you about the Aritzia winter jacket. I had one for over 4 winters and used it everyday. Completely worth the money to me since it kept me toasty warm and was not down filled (severly allergic!). I ended up buying a second one last year since the first one was too big. I tried to look around for a different jacket but found they were either downfilled or poor quality. And I did justify the second jacket by figuring out the cost/ use of the first jacket that my sister is now wearing

  13. I never thought of looking of the cost per use. I always thought when you are paying for a quality fashion accessory it will last you longer and look better on you. I am pretty minimalist but when it comes to clothing I spend on quality items because I want to look good :)

  14. I do and don’t in my head. I tend to weigh it pragmatically and emotionally. I don’t go to the nitty gritty of doing the math or even revisiting the math. But I do weigh realistically will I be using it and do I really need it and if there’s cheaper alternatives/options that I can be happy with. That usually always works for me.

  15. I don’t calculate cost per use, but I calculate how much time it will take me to make the money I would use to purchase the item. So if the purse is $285, I think to myself “how many hours do I have to work to make that?” Is it a quality item or is it just hype. If it is the former & I really like the item then I may splurge on it. I do wholehearted believe that there are certain things that are worth the price. I may be frugal in some areas but don’t mind spending more for a nice quality product. Quality last longer then cheap products.

  16. For certain items I have definitely thought about cost per use and items including winter coats are things In the past I should have spent a bit more on so they would last longer. I guess it all is relative and depends on different people’s tastes, but most of the time the cost-per-use is used for much more expensive purchases. One thing I did think about was sort of the reverse. I tend to purchase a lot of clothing items at say Forever 21, wear them twice and that’s all. Despite their lower price tags if I only wear them twice, do they actually end up “costing” me more? Would it make more sense to purchase something a bit more expensive and wear it more? It’s definitely something I will think about the next time I go out shopping.

  17. Jen says:

    While I like the idea of considering “cost-per-use”, I can identify more with Working Suburbanmom’s thoughts above: “how long did I have to work to buy this”? I find that this helps me determine want-vs-need more effectively.

  18. S. B. says:

    This seems like a reasonable way to look at purchases. I’m wondering, however, whether that might make me view a lot of my purchases more negatively than I otherwise would. They look like recurring costs to me that way, and I’ve been trained to heavily scrutinize anything that’s recurring.

    • Krystal Yee says:

      I find the cost-per-use helps me not only justify purchases, but it stops me from buying something expensive that I know I won’t use very often. My television broke a few months ago, and I still haven’t fixed it. I don’t have cable TV, so the only time I’d use the television is to watch movies. After calculating how often I’d actually watch movies every month (and every year), it wasn’t worth the cost. I’d much rather save the money, and watch movies on my laptop instead. :)

  19. Diedra B says:

    This works.
    I’m considering a $375 purse, but it has a lifetime guarantee. I plan to carry it nearly every day to work, pretty much. If I were to keep buying $20 purses made of all types of synthetics and were only able to wear each one for 6 months (not exaggerating), I’d end up spending $375 over about 9 years. Could I carry one purse for 9 years? If it was classic and sturdy, I’d be up for the challenge.

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