This past Sunday, I decided it was time to give it up. I'm tired and too old to still be doing this. It's hurting more than it's helping.
There's no way I should be on anyone's airplane at 6 in the morning. And there's no way I should do that just to save $40.
This begs the question: when should you squeeze a deal, and when should you pay the premium?
If you ask me? Pay the premium when the hidden costs are more expensive than the price difference.
Add-on costs are the bread you have to drop on attachments, accessories, or supplementary items needed to use a good or service.
When my brother set out to cop a medium-format film camera a couple of weeks ago, he quickly realized he'd be paying for more than just a camera body. Unlike standard point-and-shoots, modular medium-format film cameras require several attachments to take a photograph. You need a body–yeah–but you have to have a film back, lens, viewfinder, and film to get started. Bro had to learn how to price out listing considering these upfront expenses.
Considering add-on costs allows you to realistically gauge the total cost. It means fewer surprise $200 film backs you have to buy on top of the hundreds you put on the body. It lets you compare that eBay listing with the Redding listing fairly. Most importantly, it can end up being the most cost-effective.
Paying a premium for an option that includes necessary add-ons eliminates the need to purchase those items separately, saving you time, effort, and potentially bread.
Time costs are the value of the time and effort spent acquiring a product or service.
Over the past six months, I've been running it up on Zuck's Facebook marketplace. I’ve sold my fair share, but now I’m something of a buyer myself. The move left us without plates, so to get our food into something permanent, we found these cute, asymmetrical bowls for the low. In true Facebook marketplace fashion, these joints were only ten bones. The catch? They happened to be located across this segregated city we call Chicago, where it takes an hour to get from up north to the south side. So the bowls didn't just cost $10; they cost an entire evening.
Same as add-on costs, considering time costs lets you accurately assess the value of an option in terms of the time and effort required to acquire it. Factor in time, and you can save a precious evening to watch The Wire, build that DJ booth, or whatever else you're going to do. Looking at time costs also allows you to compare apples to apples, ensuring that the time investment aligns with the item's value.
Now, we exclude any results for items that are across town. That trip has proven not worth our time, and we'd rather pay more for the same thing at a closer location.
Opportunity costs are the benefits or opportunities you sacrifice when choosing an option. It's the value of the next best thing you could have done. In other words, opportunity costs are lost possibilities.
Last week, I flew to DC to see Beyonce in concert. I bought the flight 5 months in advance, chose to fly in on Thursday instead of Friday, and picked the most undesirable flight times (the first flight out and the last flight in). By Sunday afternoon, I was cooked. On top of that, it's taken me the better part of the week to recover. The problem wasn't that I did too much (although I was active); I was behind on sleep from the beginning of the trip.
Opportunity costs are an extension of time costs. Where time costs recognize the amount of time you have to put in to get something, opportunity costs specify the best thing you could have spent that time on. I like to fly from point A to point B as cheaply as possible with a carry-on and a personal item (Spirit and Frontier, not my cup of tea), so picking the option that saved me $40 was like second nature. But, indirectly, that cheap 6 am flight cost me my routine at the beginning of the week. The opportunity I sacrificed when I flew out at 6 am was having full energy throughout my trip and more easily getting back into my routine once I got home.
Moving forward, I’m not getting on a plane before 8 am unless it saves me big bread. Easy.
My suggestion? Be cheap until it becomes clear that add-on, time, and opportunity costs are more expensive than a price increase. When people's health or bread isn't on the line, choose the frugal option until you get burned. Defaulting to ‘discount’ saves you bread, insulates you from lifestyle inflation, and allows you to stay mindful of trade-offs.
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