While we personal finance bloggers often talk about how to save money, and how we may spend wisely and to not buy what you don’t need. But there will be a time when we need to buy something. It happens. Something breaks, wears out, or you just purchased something new for whatever reason. I just discovered packing cubes for travel. And I’m amazed how I got along without these!
When shopping for things we often talk about the cost of something… but really what we are doing is comparing the Price. It’s interesting, the price is what we pay for a good or service, while the cost can be the actual or perceived value over time, of the lifetime of the product or service we are exchanging for money.
A car is a very good example. The price of a car may be a particular amount. However, the cost of the car also includes the registration, insurance, repair and ongoing maintenance, gasoline to get around… These are things that someone can factor into the total cost of ownership.
I recently replaced my Central Air Conditioning unit for my home. In comparing manufacturers, models, and other warranties. I end up going with a RUUD, that is actually made by the much more expensive Rheem brand and carries a similar warranty. The newer unit is also much more energy-efficient, It would cost me much less to run the updated Air Conditioner to keep my house cool during the crazy hot months.
There are many other examples, like appliances. Let’s compare two washing machines. One machine has price of $400, while another has a price of $550. The model with the higher price, may have a much lower repair rate. It may also be more energy efficient, and use much less water.
Sometime the value can be convenience, or comfort that you get for what price you have paid. I’ve used this example before, but it’s a great illustration. I do value my time and convenience, so I elect to pay for Clear to breeze through Airport security and not wait in line. In this case the price I pay has a value to me.
Thanks for taking the time, to follow along. I’m curious to hear your examples of prices vs. cost and what value it brings you!