Sunday, May 8, 2011

a small problem with the economy of scale: satisfaction

Firstly, as a number-lover and budgeter, I appreciate economy of scale.

It means that if I go to a warehouse store and buy bulk, I can get my oats at a lower price per ounce. If I tell the farmer at the market that I might just buy that whole crate of apples, he might just give me a little deal and reduce the price per pound.

I don't have a problem with the concept, per se.

But there's this thing built into economy of scale when it comes to buying prepared foods; and I don't think I'll be able to sum it up clearly, so I'll just tell the little story of my coffee cup.

get the short cup

I've come to really enjoy my afternoon coffee. It's one of those mental breaks that helps carry me through the last couple of hours of work before I head back home on the bus.

I keep forgetting to pack my own coffee grounds along with lunch in the mornings; my backup cup is from the Starbucks across the way (the only coffee within walking distance of my job).

When I'd set out to get my afternoon cup this past Wednesday, I had two things on my mind: I've only allotted myself $20 for "treat" purchases this month; and I'm trying to trim back my caffeine (just one more way that I'm trying to achieve a better nutrition balance).

So I headed out thinking "You know what? for the first time in a long time, I'll get the 8 oz. cup of coffee." (If you ask for a "short" at Starbucks, they discreetly [I noticed] pull an 8 oz. cup and fill it for you.)

I was kind of steeling myself for the smaller portion. Because, you know, you just get used to having a certain amount of *anything*; and getting less can feel like you're getting ... shorted.

In any case, I steeled myself for the 8 oz. cup, and I truly got ready to enjoy the smaller amount of coffee.

And then the total came to $1.57. Umm, that's only 11 cents less than the 12 oz. cup (at $1.68). "I only saved 11 cents?! It would totally be worth 11 cents to get four more ounces of coffee!!"

That's what I was thinking. With some math running in the back of my head:

» 12 oz. is 50 percent more than 8 oz.
» $1.68 is only seven percent more than $1.57!

The value is obviously with the 12 oz. cup!

UGH. But this is the problem. I didn't *want* the 12 oz. cup. And yet the skewed valuation made me feel cheated by the 8 oz. cup. It was difficult for me to feel I'd made the right decision ... because it wasn't the "smart" financial decision.

I had to convince myself that it was still the right choice. That if I wanted the 8 oz. cup, I should be ready to place a higher value on my own desire for less coffee than on my instinct to get the "better deal."

this is nothing new

Obviously, Starbucks isn't the only food retailer that prices their menu this way; and this economy has existed for generations.

I'm not going to argue that the system should change. I just wanted to take the time to recognize how my decisions are affected by the system and ask myself what I should do to stay in control as a consumer.

solution no. 1: be happy with less at a higher cost. When it comes to buying prepared foods, whether it be in restaurants, coffee shops, bakeries, my focus *must* be on what I want ... me. I shouldn't even *think* about the larger size vs. the smaller size; the dinner platter vs. the salad and soup; the waffle cone vs. the cup of ice cream. If the "better" financial value lies with a selection that feeds me more calories (or caffeine) than I want to put in my body, it is NOT the better value for me.

solution no. 2: scratch-make it. Another argument to make most of our foods from scratch! (Or in the case of coffee, to brew our own.) When we home-make our meals, snacks, desserts, we buy ingredients in their whole -- and cheapest -- form. It's here that economy of scale works best for us ... we're buying things that we can store on the shelf until we need them, or use to make multiple meals throughout the week. And you know what else? When we use those ingredients, the cost to us is in direct relationship with the amount we pull off the shelf.

Some math (using made-up, easily divisible numbers):

» We pay $10 for a bag of coffee beans that'll make 10 cups of coffee. $1 per cup.
» One day, I decide I want only a half-cup of coffee. The cost? $0.50 per cup.

I like that. A lot.

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