The True Monthly Cost Of An Appliance

I felt compelled to write about this topic after reading a comment by Garvey on Is A Deep Freezer Worth It?:

There is no way a freezer costs $10-15/month … to run. It’s more like $3-4.

This was in response to my statement that the cost of owning and maintaining the deep freeze is about $130 per year, or about $11 a month. I came up with that figure by calculating both the electricity use of the freezer ($75/year) as well as prorating the cost of the freezer ($450/8 years, or $56/year). Add those together, and you end up with that $11 a month figure for the cost of owning and operating the freezer.

You can do similar figures on nearly any appliance or device in your home. Our television is on its last legs (bright blue spots are appearing on the screen and starting to obscure things). We bought it for only $150 six years ago, which we use for 2 hours a day, actually costs us about $9 a year in electricity. So, we pay $0.75 a month in electricity, but we’re also spending $2.08 per month for the actual cost of the television, bringing our monthly bill just to have that television in our home up to $2.83 a month.

Some will undoubtedly state that this isn’t a fair way to look at the cost of things, because once you’ve paid for the item, the cost of the prorated usage is basically free. I actually feel that’s a terrible way to look at it, because it makes the appliance cost appear as “special” costs that will make you hit the credit card or tap the emergency fund when an appliance goes out, and it also creates some skewed calculations when buying an item.

Let’s take a look at washing machines, for example. If you look at the Consumer Reports recommended appliance, the Whirlpool Duet HT GHW9400P, you’ll regularly find it in stores for $1,400. On the other hand, you can buy a low-end toploader for $200. What are you getting for that difference? The Whirlpool Duet uses less energy per wash (about 1 kWh for an average wash, versus 1.9 for a low end toploader), handles larger loads (about 4 loads in the Whirlpool versus 5 loads in the low end toploader), and will have a significantly longer life (14 years is the estimate, versus 6 for the cheap toploader). If you do, say, 20 loads a month in the toploader, you’ll be doing 16 a month in the Whirlpool. That gives a monthly energy use of 38 kWh for the toploader ($3.80) versus 16 kWh for the Whirlpool ($1.60). The Whirlpool’s cost per month of the appliance itself is $8.33, versus the cheap washer’s $2.78. This means that the cost per month of the cheap toploader is $6.58, while the cost per month for the Whirlpool is $9.93. This does not include detergent and water savings with the Whirlpool, which are pretty small ($0.50 a month or so). If you’re a heavy laundry user, those numbers get closer and closer together, so for a family with multiple children, the Whirlpool gets closer and closer to the toploader in terms of cost.

Now, the question when you do such a comparison is is that extra cost each month worth it? With the Whirlpool, you’re buying reliability (it will have fewer repair issues and won’t have to be hauled out of the laundry room as often), somewhat better cleaning, and aesthetics (they are more stylish than the cheap toploader). Is this worth $3 a month for 14 years to you? There’s no immediate answer, but for me, the reliability makes it worth it.

What’s the point? You don’t often seen the true cost of an appliance until you look at the cost of owning it per month that you’ll use it. Many people look solely at the up-front cost of an item, then when it’s purchased and paid for they forget about it until a replacement is needed. A better approach is to at least be aware how much these items are really costing you each month and recognize that when you bought the item, you effectively “pre-paid” for those months of use of the item. It’s a great way to comparison shop and it often makes more expensive but reliable and energy-efficient items look like a much closer deal than you might initially think (because they are).

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  1. How did you figure out the energy consumption of your freezer? Are you trusting the manufacturer’s stats or did you actually measure it?

  2. Robert says:

    The initial cost of the item is a fixed cost, it will never change.
    The variable cost is the usage cost.

    The fixed cost is something that you must look at. But, supposing the item lasted an infinite amount of time, the fixed cost spread over the lifetime of the product would approach 0. But for most items, we can only make a good guess at how long something will last.

    Many of my appliances that you mention, I got for free. My deep freeze was given to us by my in-laws. One of our TVs is a hand-me-down, and the other was a christmas present. Our washer and dryer came with the house (so maybe ithey cost us 100k and we got the house for free, who knows). For these mentioned items, my fixed cost is 0 – so it only costs me the energy to run the appliance.

    Variable costs are called variable for a reason. There is a chance that energy costs could go up. If that happens, then your monthly costs go up and then perhaps the savings change to a different model. Perhaps energy costs go way down to where energy is almost free (windmill). Then again, things might change.

    For me, using your metric, unless there was a vast difference between the two, I will choose to lower my variable costs.

  3. Kim says:

    The front loader uses significantly less water so one should factor that in as well.

    BTW, thanks for all the work you put into your very fine blog!

  4. Morgan says:

    You forgot one major calculation:

    top loaders are harder on clothing, linens and towels. They shred them more frequently, pull the threads on towels, and tear at seams, which means that your clothes won’t last as long in a top-loader as they will in a front-loader.

    With growing kids that may not be much of a concern, but for adult clothes, linens and towels, you will definitely notice that things washed in front-loaders last years and years longer than they would if washed in a top-loader.

  5. buffalo says:

    Nice article but you forgot a few points IMHO. First, the front loader also uses less water (a cost savings) potentially less hot water (another cost savings) and uses less energy (enviromental savings). For me reducing our energy load on the planet is always a good thing and has economic benefits that only an economist could compute.

  6. Michel says:

    “the cost of owning and maintaining the deep freeze is about $130 per year”
    The cost is higher, IMHO.
    In finances, not earning money equals losing money.
    You should add to this total cost what you would earn at minimum if you have invested the money conservatively instead of buying the item, especially if it is not an essential item.

  7. Lisa says:

    My front loading washing cost 450 not 1400. It has been very reliable and was a recommend from CR when I bought it. I also have to look at the fact that I am on a well system. The less water I use the better for the well pump. The front loader I got uses 2/3 less water to do a wash. Many people also have problems during summer with dry wells. I don’t, but a water efficient front loader would help those folks alot.

  8. George says:

    The only problem with prorating the purchase cost over the life of the appliance is that it’s pretty much impossible to forecast the lifespan of an appliance before you buy it. Just because an appliance is more expensive doesn’t mean it’ll be more reliable – often the mid-range products are just as reliable as the “high end”.

  9. smoore says:

    Here in Colorado water is at a premium and it will only get worse. “It’s a drought, DO something!” is a mantra of mine.

    Our front loading Kenmore cost $350 at the Sears scratch-n-dent store. It will *effectively* wash 2x the load a cheapie top load washer can when confronted with my sweaty, nasty, concrete filled work clothes. The top loaders just don’t do as well when you’re talking about actually DIRTY clothing. The cheap washers return dirty clothes in my experience.

    Our energy bill dropped noticeably when the washer and it’s matching $300 dryer showed up. I don’t remember the actual numbers but remember saying, “Wow!”. Our water bill was unaffected because we lived in a town where it’s a minimum of $60/month no matter what you use.

    We spent $750 on over $1000 worth of appliances and I wouldn’t do it differently now. A $1500 washer on the other hand… it’d better do the laundry by itself.

    I wholeheartedly concur with your method of figuring actual cost of an appliance but will take quality of service over absolute cost any day. Value trumps frugality.

  10. smoore says:

    whoops, typo. $650 on over $1000 worth of appliances. Sears’ scratch-n-dent store is GREAT. Seek it out for your next appliance.

  11. Kenny says:

    I understand prorating the $150 cost of your TV over many years for accounting purposes, but you actually paid that $150 just the one time, so your $2.08 per month cost seems false. It’s not like you’re paying $2.08 each month to pay for that TV, you already paid for it. That $2.08 is not a check you write each month, is it?

    Other than that, I like your general financial advice, even though it’s purely for entertainment purposes as your disclaimer says at the bottom of the page.

  12. Carrie says:

    I like the article. I like that if you go with the high end items, the cost per actually goes down more over time when you purchase mid range appliance. My case is this. We are purchasing a home on contract. (Bad divorce but with five kids, it pays to buy over renting) The house doesn’t come with the appliances. So until I have the money for the “better” stuff, I’m getting a low end model of the waher and kitchen items and line drying. My opinion is that I can sell the low end later and move a fridge to the garage when I do get a better quality item. In the meantime, I don’t have all the overhead to start my home up plus travel and laundromat expenses. Not to mention all the fast food. I love all the articles. Thay tend to cover most sides of the issue. No matter what it may be. Thanks

  13. TK says:

    If you can take your TV to a repair shop and have the electron guns cleaned (blue spots often indicate a problem with the red electron gun) and repaired for $50, then does that $50 only get added to the future cost of ownership? or does it get added to all the months you’ve owned the TV?

    ** I am asuming your TV is a CRT. Blue spots in rear projection TV’s indicate a problem somewhere in the projector (it could even be a fungus in the focusing fluid). If you have an LCD/Plasma TV, then I have no idea what causes blue spots on those. :)

  14. Dan says:

    “With the Whirlpool, you’re buying reliability”

    Do yourself a favor and buy the warranty…I’ve used mine several times.

  15. Pro-rating the cost of an item into the total cost of ownership is something I have always done for anything that costs more than a couple hundred dollars. There was a gorgeous refrigerator that we wanted when we were shopping for one. It had slightly higher energy efficiency, but cost 4 times as much as a normal one. Pro-rated, even for twice the lifetime, it just didn’t work.

    We just bought a car and did the same thing. We bought it used and assumed a five year life span. Anything more is gravy, so you don’t really have to get the life span 100% right as someone said above. If you estimate it conservatively, and can still justify the cost, you are doing well.

    As for buying the warranty, they are great money makers for the manufacturer or retailer. They are like insurance, you only buy it if you cannot afford the alternative. I can’t afford to pay someone’s $100k medical bills if I am in an auto accident, so I have insurance. But I can afford to buy another $400 refrigerator, so I don’t have insurance (warranty). In the long run, on average, you are guaranteed to lose money buying extended warranties. That’s not to say you won’t have an expensive repair that justifies every extended warranty you have ever had, but on average it is a losing proposition.

  16. Joe says:

    I would appreciate some explanation of how you estimate the life of an item and how to incorporate the life extension costs (Maintenance) I think we’ve all known or maybe are handy people who can extend the life of an item for years beyond what the manufacturer would imagine.

  17. Bill says:

    As others have pointed out, there are ways to get appliances other than buying them in the showroom.

    My chest freezer was $25 versus $400 new.

    Variable cost is $50/year instead of $30/year, but that’s a lot of years.

    Neighbor wants me to take a 30″ CRT TV for free (current 27″ CRT TV was free)

    I bet you could replace your TV from someone who went HD plasma/LCD for about the same price as I paid. :)

    And while front-loaders may have lower variable costs, bear in min the models sold here in the U.S. have not been as reliable as top-loaders.

    Be sure to set aside a little more in your maintenance budget if you choose a front-loader washing machine.

  18. Hey! This is kind of off topic but I need some advice from an established blog.

    Is it very difficult to set up your own blog? I’m not very techincal but I can figure things out pretty quick.
    I’m thinking about making my own but I’m not sure where to start.
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