Cost per wear: how to do the maths on luxury with a clear head

Two pieces lie side by side: a simple watch you would put on every morning, and an evening bag for a few evenings a year. The price tags reveal little about which one will end up costing you more. A different question is more revealing: what does each day on which you actually wear the piece cost?

The formula

The metric cost per wear spreads the actual total cost of a piece across its use. ‘Actual’ means not just the purchase price, but also what comes back to you at the end and what accrues along the way.

Cost per wear = (purchase price − resale value + running costs) ÷ number of days worn

• Purchase price: the amount you actually paid, including adjustments such as shortening a bracelet or resizing a ring.
• Resale value: a cautious estimate of what you would get after the planned period of use, minus fees and effort. If you don’t intend to sell, put in zero.
• Running costs: servicing and repairs, care, insurance. When a watch should be serviced is stated in the manufacturer’s information; the article Servicing a mechanical watch provides the background.
• Days worn: estimated realistically, not hopefully. The best guide is how often you actually wear comparable pieces today.

Insurance is the item most often overlooked. In German home contents insurance, jewellery, gemstones and objects made of gold or platinum count as valuables, which are covered only up to a set limit. According to the German Insurance Association (GDV), this limit is usually around 20% of the sum insured. If you need cover beyond that, you pay more on an ongoing basis, and those amounts belong in the calculation.

Two worked examples

The following figures are freely chosen and deliberately rounded. They do not stand for any particular product or brand; they simply show how the formula works.

Example A, an everyday watch: purchase price €6,000, assumed resale value after ten years €3,000, two services at €500 each, no separate insurance. It is worn on 200 days a year, so on 2,000 days in total. Calculation: (6,000 − 3,000 + 1,000) ÷ 2,000 = €2.00 per wear.

Example B, an evening bag: purchase price €2,000, no planned resale, care €100. It is taken out on eight evenings a year for five years, so 40 times. Calculation: (2,000 − 0 + 100) ÷ 40 = €52.50 per wear.

So the piece with the lower price is more than 26 times as expensive per outing. Whether a purchase is sensible depends less on the price than on how often the piece is used. Example A also shows how heavily the result depends on the resale value you assume: set it to zero and the cost rises from €2.00 to €3.50 per wear.

Where the metric reaches its limits

• Opportunity cost: money tied up in a piece is not available for anything else. The formula does not reflect this sacrifice.
• Uncertain resale: prices on the secondary market depend on model, condition, completeness and market conditions. An assumed resale value is an assumption, not a commitment, and certainly not a promise that the piece will gain in value. The article The luxury market in figures provides context.
• Joy doesn’t divide: some pieces, such as a wedding ring or a watch marking a special occasion, have a value that has nothing to do with the number of days worn.
• Quality changes the calculation: a well-made piece can be cared for and repaired, and it stays in use for longer. How to spot this in leather is shown in Leather goods: how to recognise quality.

The metric does not replace your own judgement; it sharpens it. This article is not investment advice.

Mental accounts: why we calculate differently

Richard Thaler showed in numerous works that people do not treat money as neutrally as classical economics assumes; in 2017 he was awarded the Nobel Prize in Economic Sciences for this. His theory of mental accounting describes how people simplify financial decisions by setting up separate accounts in their heads. Money that has been mentally assigned to one of these accounts is difficult to transfer to another.

Thaler also described transaction utility: a purchase is judged not only by the usefulness of the item but also by the deal itself, that is, by the price compared with a reference price. A supposed bargain can therefore feel worthwhile before the question of use has even been asked.

Two further findings bear directly on the metric. In experiments published in 1998, John Gourville and Dilip Soman found evidence that people grow accustomed to an earlier payment over time and that its influence on later decisions fades. They called this payment depreciation. The thought ‘It was so expensive, I have to wear it’ therefore loses its force over the years, regardless of whether the piece has proved its worth or not. Gourville also examined what happens when a price is converted into small daily amounts. In his studies, this ‘pennies-a-day’ framing increased people’s willingness to agree to a purchase across various product categories.

This is exactly where the honesty test lies: cost per wear is also a conversion of this kind. Used properly, the metric makes total costs visible. Used improperly, it becomes an argument that justifies a long-held wish after the fact. So calculate with cautious assumptions, and do it before you have made your decision, not afterwards.

Checklist before you buy

• How often would I realistically wear the piece, and how often do I wear comparable pieces today?
• Does it suit the clothes, the everyday life and the occasions I actually have?
• What running costs will there be: servicing, care, repairs, insurance?
• Is the valuables limit in my home contents insurance high enough, or do I need additional cover?
• What resale value am I assuming, and is the calculation still convincing if it is zero?
• Do I keep the receipt and papers? What buyers on the secondary market look for is explained in Buying pre-owned.
• Would I also buy the piece at the full price?

Calculate every major purchase twice: once with your estimated resale value and once with zero. If the piece still convinces you in the second case, you are buying it for the right reasons.

The takeaway: with luxury, it is not the price alone that decides whether a purchase is sensible, but above all an honest estimate of how much you will use it. The calculator below compares two pieces side by side; simply add any running costs to the price.

Cost per WearWhat a piece really costs each time you wear it, compared side by side.