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The real cost: cost per month and cost per use
How to compare prices by spreading them over time, uses or units.
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A price tag only tells you what you pay today. To compare things fairly, divide the price by how long or how often you will use it.
The cost per month is the price divided by the number of months you use something. The cost per use is the price divided by the number of times you use it. A pricey item you use a lot can cost less per use than a cheap one you barely touch. At the store, the unit price (the price of one can, one ounce or one sheet) lets you compare different package sizes.
These ideas also help with opportunity cost: money you spend on one thing can't be spent on another. Knowing the real cost helps you choose the better deal, not just the lower price.
| Phone | Price | Months it lasts |
|---|---|---|
| A | $360 | 24 |
| B | $480 | 48 |
| C | $660 | 30 |
Three phones, with the price and how long each is expected to last.
Words to know
Write what each word means in your own words.
- Cost per month
- Cost per use
- Unit price
- Opportunity cost
Questions
- Find the cost per month of each phone in the table.
Phone Cost per month A B C - Which phone has the lowest cost per month? Which has the highest price?
- Sneakers cost $120 and you wear them 80 times. A $60 pair is worn 25 times. Find the cost per use of each pair.
- A 12-pack of drinks costs $6.00. A 20-pack costs $9.00. Which has the lower unit price?
- The 12-pack, $0.50 each
- The 20-pack, $0.45 each
- They are the same
- You can't tell
- A music app costs $9 a month or $90 for a year. How much would you save by paying for the year?
- True or false: the item with the lowest price is always the best deal. Explain.
- True
- False
- Think of something you bought or want to buy. Estimate its cost per month or cost per use. What else could the money have been spent on?
Answer key: The real cost: cost per month and cost per use
Words to know
- Cost per month: The price of something divided by the number of months you use it. It shows the real cost of a big purchase.
- Cost per use: The price of something divided by the number of times you use it. A cheap item you rarely use can cost more per use than a pricey one you use daily.
- Unit price: The price of one unit of something, like one can or one ounce. It lets you compare different package sizes.
- Opportunity cost: What you give up when you choose one thing over another.
Questions
- A: $360 ÷ 24 = $15. B: $480 ÷ 48 = $10. C: $660 ÷ 30 = $22.
- Phone B has the lowest cost per month ($10). Phone C has the highest price ($660).
- $120 ÷ 80 = $1.50 per use. $60 ÷ 25 = $2.40 per use. The $120 pair costs less per use.
- B. $6.00 ÷ 12 = $0.50 each. $9.00 ÷ 20 = $0.45 each.
- $9 × 12 = $108 for the monthly plan. $108 − $90 = $18 saved.
- B. False. An item that lasts longer or gets used more can cost less per month or per use, even with a higher price.
- Answers will vary. Look for a price divided by months or uses, and a named alternative that shows the opportunity cost.
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