<p>The retail price should include the total net present value of use of the item. At any given point in time, the value of the item is the purchase cost minus accumulated depreciation. Depreciation should include both physical wear and any non-physical types of depreciation such as obsolescence. </p>

CC BY-SA 3.0
2016-02-25T12:54:21.980Z
2016-02-25T13:01:13.620Z
2016-02-25T13:01:13.620Z
D J Sims
<p>I am working with hard drives.  For simplicity,  let's say all drives have the same capacity, 1TB and all cost $100.</p>

<p>They typically last about 4 years,  when they need to be replaced.    They drop in price about 50% over that period of time.  They cost 100 dollars for the first for years,  $50 for the next 4 years, etc.</p>

<p>What's the usual way of estimating the cost of something like this?</p>

CC BY-SA 3.0
2016-02-22T19:25:33.120Z
Is this an accounting question? http://meta.economics.stackexchange.com/questions/1526/might-accounting-questions-be-on-topic
Giskard
CC BY-SA 3.0
2016-02-22T19:28:45.437Z
yeah,  that's why i put the accounting tag on it.     this seemed like the best place, didn't really fit in the "money" stack exchance
OneSolitaryNoob
CC BY-SA 3.0
2016-02-23T09:45:44.403Z
I'm voting to close this question as off-topic because it belongs to another stack exhcange network.
optimal control
CC BY-SA 3.0
2016-02-23T11:53:13.710Z
@optimalcontrol Which one?
Giskard
CC BY-SA 3.0
2016-02-23T14:05:24.787Z
@denesp I am not sure but to some SE about hardware or accounting. I don't really see any economic content about pricing (or valuation) issue on the question as it concerns a very specific example.
optimal control
CC BY-SA 3.0
2016-02-23T14:57:53.953Z
@optimalcontrol I agree it's off topic. I just don't think there is another SE site where it belongs. This does not make it on topic here though, I just found your argument misleading.
Giskard
CC BY-SA 3.0
2016-02-23T16:11:37.383Z
I'm voting to close this question as off-topic because it is not about Economics
FooBar
CC BY-SA 3.0
2016-02-23T16:20:17.300Z
This is the best SE for it
OneSolitaryNoob
<asset-pricing><cost><deflation><accounting>
Estimating the cost of an assett that needs to be replenished
OneSolitaryNoob
# Estimating the cost of an assett that needs to be replenished

(Asked by: username_0 on 2016-02-22)

I am working with hard drives. For simplicity, let's say all drives have the same capacity, 1TB and all cost $100.

They typically last about 4 years, when they need to be replaced. They drop in price about 50% over that period of time. They cost 100 dollars for the first for years, $50 for the next 4 years, etc.

What's the usual way of estimating the cost of something like this?

**Tags:** asset-pricing, cost, deflation, accounting

> **Comments:**
> **username_1**: Is this an accounting question? http://meta.economics.stackexchange.com/questions/1526/might-accounting-questions-be-on-topic  
> **username_0**: yeah,  that's why i put the accounting tag on it.     this seemed like the best place, didn't really fit in the "money" stack exchance  
> **username_2**: I'm voting to close this question as off-topic because it belongs to another stack exhcange network.  
> **username_1**: @optimalcontrol Which one?  
> **username_2**: @denesp I am not sure but to some SE about hardware or accounting. I don't really see any economic content about pricing (or valuation) issue on the question as it concerns a very specific example.  
> **username_1**: @optimalcontrol I agree it's off topic. I just don't think there is another SE site where it belongs. This does not make it on topic here though, I just found your argument misleading.  
> **username_3**: I'm voting to close this question as off-topic because it is not about Economics  
> **username_0**: This is the best SE for it  

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## 1 answers

### Answer by username_4 on 2016-02-25. Score: 1

The retail price should include the total net present value of use of the item. At any given point in time, the value of the item is the purchase cost minus accumulated depreciation. Depreciation should include both physical wear and any non-physical types of depreciation such as obsolescence.


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