Or rather, how much is saving time really worth to you?
We were inspired to create our newest tool by recent posts by Jim at Blueprint for Financial Prosperity and also by Cathryn Sykes at MoneyToSpare, who provided the math.
Jim, as we recently noted in the latest edition of OMM, saved a lot of out-of-pocket money by butchering his own chicken, but wondered if it was really worth his time to do all the extra work, rather than just buying the various chicken parts already prepared. Cathryn wondered the same thing about buying pre-peeled onions, pre-manufactured lunches for children, and baking a pie from scratch.
We've set up the tool to answer Jim's question about whether or not it's worth his extra time to do his own chicken butchery, but you're more than welcome to change the input values according to the make-vs-buy scenario you may be more interested in. We'll have some more thoughts below the tool on how to interpret the results.
Here, the effective cost of paying someone else to do the work per hour is your guide to establishing whether or not it makes sense for you to buy a pre-made product (or service) or to do the work yourself.
Here's how it works: If you believe the tool's result is low, then it makes sense to buy the item in a more finished state, rather than doing any additional work yourself. If you believe the value is high, then that's your sign that you should do the work yourself.
Using Jim's chicken butchering exercise as our example, we find that in buying the chicken parts pre-butchered, Jim would effectively be paying someone else $7.22 per hour. If Jim values his time at more than that $7.22 per hour, then it makes sense for Jim to buy his chicken already prepared, versus butchering it himself.
If Jim can cut his time in butchering a chicken in half, to 15 minutes, his effective cost per hour of having someone else do the work rises to $14.44. In that case, Jim may find it more desirable to butcher the chicken himself.
And now you have the tool you need to work out the same kind of problems for yourself! If it helps encourage you to use the tool, we found that we saved about 9 seconds (9/60) in using the tool above rather than doing the math by hand for a similar problem. If we assumed that we charged a "tool usage fee" of one penny to use our tool, that works out to be the same as paying someone else about $4.00 per hour to do the math for you.
If it takes you longer to do the math by hand, then the savings get even bigger. And considering that we don't charge you anything to use our tools, then the verdict is clear: Political Calculations is the only blog that really saves you both time and money!
- posted by Ironman at 6:25 AM | Permalink |
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