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Cost Benefit Analysis of GPS Units

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Before talk of $4 gasoline (and airlines going bankrupt and charging you to check luggage) dominated the nation’s transportation attention, global positioning system units were all the rage. Now it sounds like GPS units have become more of a luxury good, something you only get it if you are hard pressed to spend your stimulus check (perhaps there’s a second stimulus check coming?). However, I argue that GPS units might be a good investment because it makes your driving more efficient (hopefully). Let’s see, shall we?

Fuel Cost Per Mile

If you drive a 30 mile per gallon car, $4 a gallon for gas means that each mile costs you approximately 13.3 cents. If your car only gets 20 miles per gallon, $4 gas equates to 20 cents a mile. This gives you a baseline for comparison, how many miles do you need to save in order to make one of those units “worth it?” We don’t consider other costs per mile, such as car depreciation and maintenance, because that would introduce far too many factors for our simplistic calculation. If you went through the exercise of calculating the cost per mile of your car, use that figure instead of 13.3/20 cents/mile as calculated above.

Breakeven Analysis

If you get the Magellan Maestro 3200 3.5-Inch Portable GPS Navigator for $131 at Amazon, the unit pays for itself if you can save 985 miles (at 30 MPG, 750 miles at 20 MPG) over the lifetime of the unit. If you assume that the lifespan of the unit is a conservative five years, that’s 197 miles a year, or, 1.31% if you drive 15,000 miles year.

Is it really possible to save 197 miles a year? I think that if you do a lot of driving in areas you don’t know very well, it’s very possible. The class of users that I believe benefit the most from GPS units are real estate agents. What about someone who drives the same commute every day five days a week? Chances are you won’t benefit greatly from a GPS on weekdays but you might benefit on the weekend. If your GPS has integrated traffic, which the 3200 doesn’t (I just picked the cheapest unit on Amazon at the time), you could save more by avoiding traffic trouble spots.

Or, for those who are fans of The Office, strict adherence to the units could leave your car in a lake (after the jump). :)


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6 Responses to “Cost Benefit Analysis of GPS Units”

  1. Patrick says:

    I bought the TomTom One about a month ago for $149. I have lived in the city I am in for about a year and 3 months. While I have worked here for 6 years, I knew how to get to my work place and a few well known places. Being able to ask for the closest anything is a beatiful thing. I have no fear of getting lost and I’m willing to go to places I previously wouldn’t try to navigate (and I use to be a nationwide truck driver so I’m already pretty fearless).

    I want to expand on a point you kinda touched upon. Without using the traffic addon service, I find that it is handy when I’m on the highway or even in town to be able to reroute myself around a traffic accident. Without the GPS, I would just sit and wait for fear of getting lost by taking an unknown street. With a number of railroads, that can block off streets, and a number of one-way streets, my city can be troublesome to navigate. You think street A will get you out of a predicament and you suddenly find it dies out because of a railroad track and they didn’t use a bridge (sigh).

    I will not travel without a GPS now. It’s invaluable to me. My friend likes his even better because he travels out of state a lot and likes the voice talking to him.. LOL.

  2. jim says:

    One good point, in addition to the detour for accidents idea, you brought up, that I missed, was that it’s valuable for finding places around where you are. Rather than roam around for a bite to eat, just enter it into the GPS and get all the restaurants nearby and save yourself some driving time and gas.

  3. I agree that this would be good for realtors. Also, delivery drivers as well as service technicians and installers that have to make house calls in strange areas. The other potential savings here is time, which can be invaluable.

    (I’m really just trying to convince myself to buy one.)

  4. Jim says:

    I have a TomTom that I got for $150. I’m sure its saving me some money by taking more direct routes and keeping me from getting lost. But with my driving habits I don’t typically go new places and don’t get lost much. So overall I doubt I’m saving enough to pay for the unit.

    I enjoy the GPS mostly for the convenience and time savings. I don’t have to look up directions online, but can instead just plug the address into the TomTom. We recently took the TomTom on a trip to Hawaii. It definitely helped there since we werent’ familiar with the roads at all. It both helped us find our way and allowed us more confidence to easily go places we probably wouldn’t have otherwise. It actually made our vacation funner.

    Most importantly I enjoy having the GPS to help keep me from getting lost. I hate getting lost and no longer fear doing so.

    Jim

  5. Jim D says:

    It has been a while now… further thoughts on this topic please… who has paid for new maps which seem to cost $50 to $100 to upgrade.

    Any other costs that have been found out over time.

    I am thinking of buying a device but with mapquest and google maps… I am not sure…thanks in advance…Jim D.

  6. Michael says:

    On a trip from Las Vegas to Corpus Christi my Garmin GPS took me through the mountains and then almost into Mexico. I went back to mapping routes and entering them into the GPS. Twice it took me through a downtown area when a bypass was so clear on the map. Not so sold on GPS.


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