TCO - How to think like a Capitalist

There you are standing in the computer store trying to decide between two printers, A and B. Both have the same features, same warranties, same manufacturer and can be expected to last 5 years. The difference? A costs $50 and B $100 and B costs about 1 cent per page to print while A costs 5 cents a page (special paper). Which one should you buy?

Well, you could do "eeny meeny miney moe" or you could employ a capitalist tool called "Total Cost of Ownership" or TCO. This is a good measure of true cost. For example, you print about 10 pages a week or roughly 500 pages a year. So, over the lifetime of the printers, you would be printing 2500 pages. So, A would cost you $50 + 2500 x 5 cents or $175 while B would set you back $100 + 2500 x 1 cent or $125. I guess the cheaper printer would come out more expensive! Of course, if all you do is print one page a week or roughly 250 pages over the 5 year period, the TCO would be $62.50 and $102.50 respectively.

The above example is, of course, extremely simplistic. In real life, you may be comparing completely different technologies or different services with different guarantees etc. You may not even be able to predict your own behavior! But, if you compute TCO consistently, you can get a good feel for the costs and perhaps it would force you to figure out exactly how much you are going to use your new purchase.

So, big deal! Why is it so important? Well, TCO is a tool that we should employ in our daily lives but we don't. For example, many of us do not realize how much that must-have sweater really costs when you carry a balance on your credit card. Similarly, when we buy an inexpensive jacket that lasts just a year or two, we may end up paying a lot more in the long run than buying an expensive but durable jacket.

Another time we should employ TCO is when we are buying a car. We often pay far more attention to the price than to the costs of regular maintenance, fuel, insurance and what the vehicle would fetch when we want to replace it with a newer car.  You will find that the initial cost of the car (the purchase price) gets swamped by these"extras".  Similarly, when you renting or buying a residence, try to figure the costs of heating and cooling.  You will find that a well-insulated house is worth some extra dollars.

Anyways, keep TCO in mind the next time you are shopping for anything or even deciding whether to drive your own car or a rental on a road trip.  The results just might shock you...

Postcard from Europe #2

Long time back I was once traveling from Germany to Greece by train and ferry and I met a bunch of American college students who were going my way. We traded stories and tips on places to stay and things to do. We changed trains in Milan and had some time to kill. One of the fellow travelers looked up a sheet of paper from her backpack and got really excited. "There is a McDonald's right outside the station! We don't have to go far!".

Huh?

Well, as it turns out, the beautiful Milano Centrale was right across the street from a McDonald's. But weren't we coming from the land of McDonald's? We could always have a happy meal back home. But, the Golden Arches beckoned my fellow Americans and despite my pleas to look elsewhere, they went off for cheeseburger and coke. I browsed through a few shops and soon had my hands on panini and gelato. We gathered up in the park right outside McDonald's where we compared notes.

I hate to gloat (well, maybe just a little bit...) but I think I came out far ahead in our quest for good food. My fellow travellers discovered to their horror that they had just spent a rather large amount of money (Italian Lire were confusing) on the food that they thought would be fairly inexpensive while I not only came out cheaper, but my food was not "icky" or "weird".

The lesson was not forgotten by them when we disembarked from our next train in Brindisi and found a small trattoria just a few blocks off the beaten path where the food was good, portions were large and the price was very very sweet.

But why is all this important? Well, back in 2000, the American people (s)elected a guy that they would feel comfortable drinking beer with. And less than 8 years later, we are in deep trouble. Now, we have two candidates - John McCain who, despite his "maverick" moniker, is in lockstep with the outgoing guy on most issues and Barak Obama who seems to be a step in a new direction. Now, there are many Americans who feel that Obama is an untested choice and thus feel that they should stick with a familiar face. Well, my good friends, this is not the time to grope for the familiar. The scrutiny of Obama over the last two years has revealed a guy who is a decent choice. No, he cannot fix all the problems faced by our country right away. But at least he has a good head on his shoulders and a team of advisors that anyone should be proud of.

As my fellow travellers learned, reaching for the familiar doesn't always get you the best deal. You do want a good deal, don't you?

Colin Powell speaks... But did he say enough?

I don't have to tell you that the biggest political news over the weekend was Colin Powell's endorsement of Barack Obama for the presidency of USA.  Rightly or wrongly, Colin Powell is considered an influential person in American politics.  He was the Chair of the Joint Chiefs of Staff (the first Black) under Papa Bush, Secretary of State (the first Black) under Baby Bush and he is associated with the selling of the current Iraq War at the UN.

Colin Powell made quite a spirited effort to denounce the "Obama is Muslim" strategy of McCain/Palin ticket by saying "So what if?  There is an American soldier who is buried in Arlington National Cemetary who died fighting for US in Iraq and he was Muslim."  But is this really news to him?

The Republican Party and the Bushes have been using this strategy for years.  There was the "Cadillac-driving Black Welfare Queen" during Reagan's campaign and Willie Horton during Papa Bush's campaign.  In 2002, the Republicans questioned the patriotism of Max Cleland, a guy who lost both his legs in the Vietnam War.  Baby Bush and his surrogates used similar tactics to question Purple Hearts awarded to John Kerry during his military service in the Vietnam War.

Has Mr. Powell truly changed his mind?  Or is he a Johnny-come-lately just so that he can say that he supported Obama?  Has he realized that the Republican party has treated him as a prop (much like they have used Condi Rice and Clarence Thomas)?

If Colin Powell really has had a change of heart, he should do the honorable thing between now and November 4 -- Vigorously campaign for the Obama/Biden ticket by pointing out that John McCain and Sarah Palin are not good for our country.  They would rather demonize their opponent than support good ideas that improve our country.  And Mr. Powell needs to reiterate that the Iraq War, enthusiastically supported by John McCain, was a folly of the first order.  His ex-boss got it completely wrong and there is no other way to look at it.

But the question remains, would he?  I guess just a couple of weeks would make it crystal clear...