Cost per Unit of Fun
Compare purchases by the meaningful enjoyment each use creates
- Difficulty
- Easy
- Time to result
- ~days to results
- Steps
- 5
- Confidence
- 98%
Cost per Unit of Fun evaluates a purchase by dividing its total financial burden by the meaningful enjoyment it is likely to produce. First establish that the item fits the buyer's budget; affordability remains a hard constraint. Then estimate realistic frequency of use and consider the quality of the experiences enabled, particularly time with family or friends. Compare that return with alternatives rather than judging the sticker price in isolation. An expensive bike used for dozens of family rides may deliver more value than a boat used three times a year. The mechanism replaces universal prohibitions with a personal value calculation: affordable cost plus frequent use plus meaningful experiences produces a potentially sound purchase, while status-driven or rarely used items score poorly.
Origin
Extracted from Masters in Business, where Carl Richards explains why a costly trail bike became one of his best financial decisions by generating frequent rides and family experiences.
Core principles
- 01Affordability matters more than social approval.
- 02Frequent meaningful use can justify a high upfront price.
- 03Experiences with loved ones produce especially valuable returns.
- 04Personal enjoyment matters more than conventional spending rules.
- 05A low purchase price does not guarantee good value.
How to run it
- 1
Set the affordability boundary
Verify that the purchase fits within your budget without jeopardizing essential expenses, reserves, or financial commitments.
Pro tip Judge affordability using the complete ownership cost, not just the purchase price.
Watch out Enjoyment does not make an unaffordable purchase financially sound.
- 2
Estimate realistic usage
Forecast how often you will actually use the item based on your routines, location, interests, and past behavior.
Pro tip Use a conservative estimate rather than an aspirational one.
Watch out Do not confuse imagining a new identity with evidence that you will use the item.
- 3
Define the unit of fun
Identify the concrete experience each use enables, such as a family bike ride, a mountain run, or a day sailing.
Pro tip Give extra weight to experiences shared with people you love.
Watch out Do not use prestige, novelty, or social approval as substitutes for personal enjoyment.
- 4
Compare value across options
Compare the item's total cost and expected experiences with cheaper, more expensive, or entirely different alternatives.
Pro tip Include durability and replacement frequency when comparing options.
Watch out A cheap item can deliver poor value if it fails quickly or remains unused.
- 5
Spend decisively when it qualifies
If the purchase is affordable, likely to be used, and enables experiences you genuinely value, permit yourself to buy it without guilt.
Pro tip Reassess after several months to improve future spending decisions.
Watch out Do not treat the framework as blanket permission for impulsive consumption.
In the wild
Richards bought a $5,000 Moots trail bike even though the price could appear extravagant. He repeatedly rode it with his wife and children, turning the equipment into a vehicle for exercise, family time, and memorable experiences. Its frequent use made the effective cost of each enjoyable outing comparatively low.
→ The bike became what Richards described as one of his best financial decisions.
Richards loves waterskiing, but a boat would carry a much higher cost while being used only three or four times each year. Dividing that expense by its limited opportunities for enjoyment produces a less attractive result than frequently used running shoes or a bike.
→ He recognizes that loving an activity does not automatically justify owning its expensive equipment.
Common mistakes
Looking only at the sticker price
A large upfront cost can obscure frequent use, durability, and meaningful experiences, while a cheap item can still provide little value.
Buying an imagined identity
People often purchase what they believe should make them happy rather than what their demonstrated preferences show they value.
Ignoring affordability
Cost per unit of fun only becomes relevant after confirming that the purchase fits the budget and does not undermine essential financial needs.
Is it for you?
Best for
It is best for people choosing among affordable hobbies, equipment, vehicles, travel, and other experience-enabling purchases.
Not ideal for
It is not suitable for purchases that require unaffordable debt or whose financial consequences threaten essential goals.
From the transcript
“It was it was cost per unit of fun.”
“When I divide that per unit of fun, I don't get the same outcome.”
“the greatest source of happiness that we have, and the research is pretty clear about this, is memorable experiences with the people that we love.”
From the episode
At the Money: Smart Spending vs. Not Spending