scorecardresearch
The real expenses: Neglecting running costs

The real expenses: Neglecting running costs

Which bulb do you use at home? A lot of us still use bulbs, because at about Rs 25, they are cheaper than a CFL, which costs Rs 125, and a 2-Watt LED, which costs Rs 450-700. Never mind that the CFL lasts around four times longer, and an LED at least twice as much.

Which bulb do you use at home? Chances are it’s an incandescent one. For years, we had no other option. Though today there are CFL and LED lamps, we still use these bulbs, because at about Rs 25 a bulb, they are cheaper than a CFL, which costs Rs 125, and a 2-Watt LED, which costs Rs 450-700. Never mind that the CFL lasts around four times longer, and an LED at least twice as much.

“Most people go all out when building their houses, but they don’t realise that many costs don’t end when the building is done,” says Chennai-based architect, Anuradha Rao. The continuous expenses are known as the total cost of ownership or TCO. It considers both direct and indirect costs of a product, instead of just the sticker price. Which is what Rao does; she suggests shaded windows to her clients rather than large, clear glass windows. Even if the glass costs less than the shaded windows, you’ll lose the cost advantage in a couple of months when your air-conditioning bill hits the stratosphere.

It makes sense to calculate TCO even if you’re buying a gadget. Take the iPhone. Apart from the Rs 31,000 you pay for an 8GB handset, you’ll have to shell out Rs 999 as a monthly fee as well as monthly call costs. By our calculations (i(ndia) Phone ), the ownership cost of the iPhone over two years is actually over Rs 50,000.

Beware of the hidden costs as well. Take the case of co-branded airline credit cards. You are promised any number of air miles, discount vouchers and upgrades. But what few people realise is that not every flight will earn miles. Cut-price tickets may gather no miles. To upgrade or make use of the miles, you’re forced to use that airline even if a rival carrier is better.

Anuradha Rao
Anuradha Rao

When feasible, the architect recommends doing away with glass windows. Instead, she suggests using scientifically placed louvers, to minimise use of artificial lighting.

SOLUTIONS

• Do your research. The cheapest item may be the most expensive in the long run.

• Don’t go blindly by the sticker price. Find out about the maintenance and running costs.

• Read the fine print. That’s where you will find the hidden costs.

WHAT YOU PAY
You often spend more than just the purchase price
ProductPrice (Rs)Maintenance/running cost (per month)Total cost over 2 years (Rs)*
Glass windows (600 sq ft)3,00,0007-10% increase in power bills3,60,000
Small car (petrol)3,50,000Rs 2,000 (petrol, spares)3,98,000
LED lamp (2W)450Nil (lower electricity bills)450
* The total cost of ownership does not take into account any freebies, which might reduce the cost, or any accidents, which might increase it.