Numerical reasoning for personal decisions
Two offers, two structures, two sets of conditions. The maths is usually simple; the difficulty is that the options aren't presented in comparable form.
Put both offers on one basis
To compare offers, convert each to the same basis: total cost over the same period, cost per unit, or annual percentage terms. Then list the non-price differences separately. Most confusion comes from different time periods, hidden fees, introductory rates and per-unit pricing designed to look cheaper.
Putting options on the same basis
| Decision | Common basis | Trap |
|---|---|---|
| Phone plans | Total cost over 24 months, including handset | Low monthly price with long lock-in |
| Loans | Total repayment and annual rate | Focusing only on monthly payment |
| Subscriptions | Annual cost | Monthly framing hides the total |
| Groceries | Price per unit weight | Larger pack not always cheaper |
| Energy tariffs | Cost per unit plus standing charge | Introductory rate ends |
| Insurance | Annual premium plus excess | Cheap premium, high excess |
A worked example
Plan A costs 25 per month for 24 months with a free phone. Plan B costs 15 per month for 24 months, and the same phone costs 240 upfront. Plan A totals 600. Plan B totals 360 plus 240, which is also 600. The plans are equivalent in cost, so the decision should rest on flexibility, ownership and what happens after 24 months.
Questions to ask about any offer
| Question | Why it matters |
|---|---|
| What is the total cost over the full term? | Reveals equivalence |
| What happens when the introductory period ends? | Changes the real cost |
| What fees are not in the headline price? | Setup, exit, late fees |
| Can I leave early, and at what cost? | Flexibility has value |
| What am I giving up in the cheaper option? | Service, quality, coverage |
The most visible number is the least useful
Offers are often designed so that the most visible number, usually the monthly payment, is the least informative. Reframing everything as a single comparable figure removes that advantage. Writing the comparison down also matters: holding two multi-part offers in mind at once exceeds working memory for most people, which is exactly when errors happen.
A practical routine
- Write both offers in a two-column table.
- Convert to the same time period.
- Add every fee you can identify.
- Note non-price differences separately.
Comparison questions
How do I compare two offers fairly?+−
Convert both to the same time period and include all fees, then compare non-price factors.
Why do cheap monthly prices mislead?+−
They can hide long contracts, upfront costs or rate increases later.
What is unit pricing?+−
Cost per standard unit, such as per liter, which makes different pack sizes comparable.
Should I always choose the cheapest option?+−
Not necessarily; flexibility, quality and service can be worth paying for.
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