Eating on a Budget: The Cost of Convenience

When tallying up the cost of college, food is a major expense. After all, you need to eat daily, it can be tempting to choose taste over price, and many group activities involve meals. Out of all the expenses in college, it is also one you won't outgrow; you will stop paying for your tuition eventually, but you will still need to pay for food. Because food is an endless expense, we let it have the honor of being the first financial advice article on our blog.

Food can consume your budget.

Have you ever wondered why the cost of snacks is so high in theme parks and movie theaters? How can a hot dog be worth three dollars at a gas station but 11 dollars at a football stadium? The price gap is because of a principle called the cost of convenience. The cost of convenience simply means that businesses know they can charge more money based on how convenient it is to have their product compared to the competition. After all, you could smuggle a slice of pizza into a movie, but isn't it so much easier to buy a slice at the theater for a fee? This convenience cost has three dimensions: when, where, and effort.

When

Do you notice that summertime clothes go on sale in the winter? The same principle applies to food. Due to consumer interest, external factors, and sometimes growing season, food's price is influenced by when you want to buy it. For example, although it isn't necessarily food, candy prices spike in October and plummet on the first day of November. As a healthier example, you can buy tomato seeds for a fraction of the cost of a tomato, but you would have to wait until your tomatoes can be harvested. In both cases, when you buy food can greatly impact the cost.

Where

Tourist areas in cities will also charge more for food. (Photo Courtesy of David Vives)

We referenced this aspect at the beginning when referring to theaters and theme parks: where you buy your food influences the price. Think about an airplane: when you're in the air, there is no way for you to get food without purchasing the airline's food, so they can set the prices as high as they want. You could, of course, wait to buy cheaper food when you land, which connects back to the first aspect we covered. Another part of the "where" aspect is proximity to the food; peaches sold near a peach orchard are cheaper than the peaches sold in Alaska.

Effort

Finally, we have effort, which may be the most neglected aspect: how much effort you put into making your food influences the price. Think about food delivery services: driving to a restaurant and picking up your food is cheaper, but you could also pay extra to have someone deliver it for you, which is effortless on your part. As another example, you could pay extra to eat at a nice restaurant, or replicate the same meal at home for a fraction of the cost; the ingredients are the same, but one requires effort on your part.

Again, food is an endless expense, but that doesn't mean it has to be expensive. Go eat with friends, shop at grocery stores, have snacks -- but don't forget the cost of convenience and how it can leave you spending more money than you should.