Friday, November 26, 2010

Total Cost of Ownership and the Low Cost of Utilities

I've thought a lot recently about what is called, "total  cost of ownership" and the junk that we accumulate in our personal lives. The purchase price of an item is apparent to all of us, but the total cost of having whatever it is we buy is not readily apparent to most. When you buy a car, for example, we think of the purchase price as a large up front cost and that after it's paid off we're in the clear. But of course there is insurance, registration, gasoline and maintenance among other costs that we'll pay throughout the time we own the car. Those can add up to a significant cost of ownership.

But it got me thinking about something we all purchase but that many of us take for granted: utilities. Our water, electricity and natural gas come to us so very cheaply even if the bill we pay has been rising fast in recent years. One reason I say these are cheap is that we don't need to do much to receive them. Every other product we purchase we need to get into our cars, negotiate traffic and parking, arrive at the point of sale, then return. This can often take an hour or more of our time. After we purchase these items, we have to store them so that they won't be stolen, become damaged and be in the way of our day-to-day lives. The travel to procure and storage requirements are costs that few people recognize very clearly. Storing our consumer goods and the time and energy spent traveling to purchase and bring them home are, in my opinion, significant costs to owning things like shoes, furniture and other household items.

But gas, water and electricity come to us without a need for us to provide any storage. Nor do we have to take a trip to the store to purchase them.

Many people apparently don't share my distaste, especially for the search and retrieval part; I understand that shopping is the top recreation activity named by Americans. But I'd rather have someone else deliver all my goods so that I can shield myself from what I consider an increasingly distasteful part of our culture: marketing and consumption.

In that way, utilities are a bargain.

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