Saving Pennies or Dollars is a new semi-regular series on Money360, inspired by a great discussion on Money360’s Facebook page concerning frugal tactics that might not really save that much money. I’m going to take some of the scenarios described by the readers there and try to break down the numbers to see if the savings is really worth the time invested.
Marie writes in: My grandfather was not a wealthy man, but he always told me to buy the best quality I could afford, it will last longer. When I was in my early 20’s I purchased a professional hair dryer for about $250.00. This was in the mid 90’s. So that’s about $20 a year so far. I feel like I am already ahead considering a $20 hairdryer never worked for a year. What products are worth spending money on…and I find when possible buying industrial or professional grade products last longer.
Marie makes a great point, albeit one that’s hard to quantify exactly. I’ll try to dig into it with a few examples, but suffice it to say, it’s really only worth paying significantly more for reliability if you use the item all the time. Of course, if you’re rarely using the item, why buy it to begin with?
Take my kitchen knives, for example. Sarah and I received a good (but not great) kitchen knife set as a wedding gift in 2003. The primary knife I used from that set was the chef’s knife. After about two years of steady use (steady meaning roughly every other day), the chef’s knife was nearly unusable. I could get it moderately sharp immediately after a sharpening, but the blade would lose what little edge it had by the time I was finished chopping a single carrot. The end result was that I was burning significant time sharpening and honing this poor knife, not to mention the extra time spent actually chopping the food the mangled food that resulted from this.
I then invested in a single high-end chef’s knife, an $80 Global knife. I still use it every other day, but now I hone it perhaps once a month and haven’t sharpened it in three years. I’d estimate this knife saves me five minutes over the other knife every single day.
Here’s the thing: most people would simply shrug their shoulders at five minutes compared to the $80 cost of a knife. However, over the course of three years, five minutes every other day adds up to 2,738 minutes. That’s about forty five and a half hours I saved not having to deal with the knife. That means my cost per hour saved by that knife is about $1.75.
Now, let’s say I only used a chef’s knife once a month, but I still saved five minutes each use from a better knife. Over three years, that’s 36 uses, which at five minutes each adds up to three hours. My cost per hour in this case is about $27.
Clearly, in the first case, the knife was worth it, but in the second case… not so much. The difference between the two is one thing and one thing alone: frequency of use.
So, take Marie’s case. Let’s say she uses her hair dryer daily. She finds that after 350 daily uses, her $20 cheap hair dryers fail. On the other hand, her industrial dryer has withstood 7,000 daily uses (roughly) and is still going. For her, the industrial dryer is worth it.
Now, let’s look at me. I dry my hair maybe once a month. My hair is short and most of the time, a vigorous towel drying and a comb gets me where I want to be.
For me to burn out a $20 hair dryer, I would have to use it 350 times, as per Marie’s estimation. If I use it once a month, that means I would have to use the dryer for 28 years before it would reach that 350 use level.
For me to reach Marie’s use level on an industrial hair dryer, I would have to use that hair dryer, at my current pace, for 583 years.
Simply put, it’s not cost efficient for me to buy an industrial hair dryer. It probably is for Marie, but it’s not for me. What’s the difference? Frequency of use.
It is absolutely worth your while to own a quality, reliable version of an item you use every day (or close to that). You’ll save a lot of dollars (and/or a lot of time) over the long run in such cases. However, when you start looking at less frequent usage, the math is going to start working against you.