Monday, October 6, 2008

The Economics of the F & E Factor

This morning, I find myself contemplating the past year of riding. I know Irondad (among others) posted a piece (one of his first, I think) about the economics of riding a motorcycle. I made the mistake that almost every first time motorcycle buyer makes and over estimated the savings of having a bike for a primary vehicle.

The first time I calculated the ownership costs I never included the fact that tires would wear out every 12,000 to 18,000 miles and replacing them would cost almost half as much as an entire set of tires for my subcompact.

Plus there is maintenance that needed done. Can't neglect that. Valve adjustments, sparks plugs, brake pads...

My original calculation were way off in favor of the motorcycle. I soon realized the error in my formula. Even though my weekly gasoline costs went from about $75 per week to $30 at $2.85 per gallon, the price of gas when I first bought Lady, maintenance costs were taking a chunk out of the fuel savings.

However, as others have pointed out, when the cost of gasoline approaches $4.00 a gallon, the savings is definitive. Even with maintenance costs, the edge definitely goes to the motorcycle.

I now realize that while my original calculations were in error because of neglecting to add maintenance costs, they were also in error because they also neglected to calculate the value of the F & E factor.

What's the F & E factor, you ask? Its not an accounting term, though it might as well be in our calculations. The F & E factor is that intangible part of motorcycle ownership often neglected. Its that part of ownership that understands why a dog always sticks their head out a window when riding in a car. The F & E factor is Fun & Enjoyment.

Lady has racked up over 17,000 miles in the past year. About 1,200 miles was a vacation to Tennessee. Another 2,500 miles were spent on shorter two-up trips. The balance can be can be attributed to my daily commute and neighborhood errands.

While I have not spent nearly as much time riding two-up as I had anticipated, the time spent was at least triple the time I'd spent with Teresa before. My passion for riding quickly became our passion for riding. When my skills improved, her passenger skills improved, too, and her F & E factor increased as well.

If I were to analyze motorcycle ownership now and compare it to automobile ownership, with the current price of gasoline (about $3.50 in central Ohio), the cost of insurance, and the cost of scheduled maintenance, my calculations would indicate a savings of about $800 this past year.

Factor in the F & E value, and the savings is immeasurable. Time two.

Ride Safe


Steve said...

The official accounting term you might use is "Intangible Benefits" which is what my wife used (she was a CPA) to justify the purchase of her scooter.

Using her formula, the scooter paid for itself about 35 minutes after we purchased it. Gas savings pay for maintenance and serve to increase its "margin".

The "Return On Investment" has been immeasurable as you have noted in your article as we both now share the love of riding.

Doug C said...

Steve - So glad your ROI is also skyhigh!

Ride Safe

irondad said...

You get it!!