A beer is cheap but why are MacBooks so expensive? You won’t see anyone bat an eye about buying a $6 beer or margarita but what about a $1,800 MacBook Pro? The problem here is we only judge cost at face value and often fail to consider the time cost of things. In this article, I hope to prove to you why a beer is actually more expensive than a MacBook Pro.
A Beer vs. A Macbook Pro
A $6 beer is consumed in probably 15 minutes. That makes it’s hourly rate $24/hour. Now what about a MacBook Pro? How long might you use one of those? For me, I’ve been using my MacBook Pro since September of 2016 which is almost 5 years. My MacBook originally cost $1,750.
Most of us would say, “Wow, I could by over 290 beers for the cost of that one MacBook Pro.” Which would be true, to be fair. But the problem is cost has to take into account time to really understand true cost.
Now, like I said, my MacBook Pro cost me $1,750 and I’ve been using it for 5 years as my daily work computer. That’s 5 years, 52 weeks, 5 days a week, 5 hours a day (conservative). If you multiply all those numbers together, you get 6,500 hours that my MacBook has been serving me. So what’s it’s time cost?
Time Cost = Cost / Time of Consumption
Beer = $6 / 15 minutes = $24/hour
MacBook Pro = $1,750 / 6,500 = $0.27/hour.
That means that my beer out with friends is actually 88x more expensive than my $1,750 MacBook Pro.
Another Example? Well I’d Love To!
A House vs An Outback Special
Shameless plug, I worked at the Outback Steakhouse in college and was the 2014 Server of The Year.
That actually didn’t happen. I was just your average server. But! I did sell a heck of a lot of Outback Specials which I would like to use in this example.
An Outback Special
Many might be wondering what in the world an “Outback Special” is. And that’s a fair question. An Outback Special is an item on the menu at the Outback Steakhouse and it includes a steak, salad, and two sides. Truly a masterpiece. But let’s cut the pleasantries and get down to business. What’s the time cost of a $15 Outback Special?
Time Cost of Outback Special = $15 Dinner / 1 Hour Consumption = $15/hour
Nice! Look at that! Twice the “price” of a beer, but half the time cost.
Okay so this one will obviously require some generalizations so hang with me. Let’s say for example we are looking to buy a $175,000 3 bedroom 2 bath house. We get a 30 year mortgage at 3.5% interest and don’t pay down any extra. We will end up paying $226,318 to buy that house when you add up all the payments over the life of the loan. Now, let’s assume we live in the house for 40 years. We spend 14 hours a day in the house.
Time Using The House = 40 years * 52 weeks * 7 days * 14 hours = 203,840 hours
Time Cost = $226,318 Home / 203,840 hours = $1.11 / Hour
This means that getting a steak out is actually 13.5x more expensive per hour than buying a $175,000 home.
Please note I am not advocating starting to buy expensive things because they have a lower time cost. I am, however, advocating for considering the useful life of things when you make a purchase decision. The truth is, staying away from disposable consumption is great for our finances. Things like buying water bottles, coffee, alcohol, eating out, etc. We consume these things so quickly that they can be priced low and thereby perceived by us as “cheap” even though in the long run, they are SO much more expensive than higher priced, longer lasting things.
High Time Cost Items
- Alcohol ($6 beers, $10 cocktails, $4 shots)
- Coffee ($3.50 americanos, $5 lattes)
- Food ($14 burgers, $25 pastas, etc)
- Water Bottles ($3)
Low Time Cost Items
- Houses (Low time cost + resale value)
- Cars (Reasonably priced ones that you actually use)
- Computers, phones (Yeah, iPhone’s are expensive, but people’s faces are glued to those things these days. THAT’S a low time cost right there.)
This is without question one of the worst articles I’ve written in a long time. But I really wanted to get this idea out there. The old saying, “Don’t judge a book by it’s cover” without question applies to assessing the cost of things.
Go be smart with your spending and buy quality things. Buy those $400 shoes that can be resoled and will last 15 years. Get the expensive computer that lasts 8 years instead of the crappy half priced one that lasts 2.
Anyway, that’s it. Did I convince you that a beer is actually more expensive than a MacBook Pro? I hope you might start to see cost as more than the sticker price. Signing off!
– The Frugal Feline