How to Calculate the True Cost of $0.49 DVD Club Offers

DVD clubs make offers that sound too good to be true. While their pitches usually aren't false, they can be misleading. DVD clubs are in business to make money. While they often make a reasonably good introductory offer to entice you to join, they make it sound irresistible by downplaying or burying some important details in the small print. This article offers a simple way to calculate the true cost of those 49-cent DVDs.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Calculator or paper and pen

How to Calculate the True Cost of $0.49 DVD Club Offers

1. Calculate the cost of the initial set of DVDs by multiplying the quoted $0.49/DVD by the number of DVDs you order at that price. If the offer includes five DVDs at that cost, the number you get from this step is $2.45.

2. Calculate the cost of any additional DVDs you need to buy before you can cancel your membership. For example, if you need to order five more DVDs over the following two years at prices "as low as" $19.95, this step would give you the sum $99.75.

3. Calculate the cost of shipping and handling for each shipment. If you buy five DVDs now, and the shipping and handling cost is $2.99 for the first DVD and $1.99/DVD for the remaining 4 DVDs, the total for this shipment would be $10.95. If you order the remaining five DVDs from the club one at a time, you need to add $2.99/DVD for the next five. The total for this step would be $10.95 + 5*$2.99 = $25.90.

4. Sum up the totals from the first three steps. In our example this would be $2.45 + $99.75 + $25.90 = $128.10.

5. Now divide the total cost of $128.10 by the total number of movies the DVD club is selling to you at that price. In our example that' would be 10 DVDs at an average cost of $12.81/DVD. This cost is reasonable for brand new DVDs, especially when you compare it to the cost of buying new DVDs at a bookstore or from Amazon.com. However, it is far from the deal of $0.49/DVD you may have thought you were getting.

Tips & Warnings

• If the initial offer allows you to add another DVD at $14.95, thereby reducing how many you need to buy in the following two years you save $5 from the price of that DVD and another $1 from the shipping and handling cost. This would reduce your average DVD cost by $6/(10 DVDs) or $0.60. The new average cost is thus $12.21/DVD.
• Adding another DVD at $9.95 to that shipment without reducing the number of DVDs you still need to buy adds $11.94 ($9.95 plus $1.99 shipping and handling), bringing the total cost to $134.04 for 11 DVDs for an average cost of $12.19/DVD. As you can see, this additional DVD does not save you much in the average cost per DVD.
• As long as you don't mind waiting a while for new movies to become available, you may consider buying DVDs from a store. Target and Walmart sell many DVDs at reduced prices, sometimes lower than $10. Blockbuster sells "pre-viewed", or used DVDs for as little as $20 for 4 DVDs ($5/DVD), and certain second-hand CD/DVD stores sell them for as little as $4 each.
• Don't forget that unless you plan to give away or sell your DVDs after you've watched the movies one or more times, you'll need to find a storage solution. Depending on how expensive a solution you choose, the real cost of those DVDs may be substantially higher. However, that would be true regardless of where you bought them.
• If you plan to watch the movies only once, renting them through a service such as Netflix or from a video library such as Blockbuster is significantly cheaper. Borrowing DVDs from the local library is cheaper still, costing just the price of gasoline to get to the library and back, no matter how many DVDs you borrow each time. If you do this, just make sure to return the DVDs on time so you don't pay late charges and/or lose your borrowing privileges.
• If you buy used DVDs, make sure to watch them before the return period expires in case the DVDs are bad. These return periods may be as short as seven days, so be sure to ask about it before you leave the store.