It all adds up

What you pay for something is only a fraction of what it will cost you.

Your mom was right. Paying more for a higher-quality item often costs you less in the long run. She may not have known it at the time, but she was applying the principle of life cycle cost analysis.

The basic idea of life cycle cost analysis is that the purchase price represents only one factor in the ultimate cost of an item. That premise holds true whether you’re talking about a light fixture in a single-family rental property or an HVAC system in a multistory office building. Other considerations that may determine what you will spend on an item include expenses associated with design, installation, energy use, maintenance, disruptions, and disposal.

Focusing on purchase-price alone–while often the most convenient measure to compare–can place far too much emphasis on one aspect of total cost. According to an article about doors in Building Operation Management, you will spend 10 times as much on maintenance than the purchase price for most hardware applications.

Determining the life cycle cost for an item or system can be as simple as running through a mental checklist of potential costs or as complex as plugging several variables into a detailed computer program. Either way, there’s likely to be some guesswork.

The next time you make a purchase decision, make sure you’re looking at the big picture and you may save yourself a lot of money.

Illustration © Artville.

Buyers & sellers, visit www.texasrealestate.com.
REALTORS®, visit www.texasrealtors.com.