Rob Collie explains how to calculate Value Above Replacement:
Let’s say you’re trying to improve the fuel efficiency of your car, and you have a budget of $100 to make those improvements. Furthermore, let’s say that you can only spend your budget on three different kinds of improvements: better tires, better spark plugs, and a better exhaust system.
The simple answer, of course, is to buy the Best of each part – the best Tires, the best Sparkplugs, and the best Exhaust System.
But what if Reality rears its head and rudely insists that the Best Costs More? What if there are a range of options available in each bucket, with varying price AND effectiveness? Then what?
Read on for the solution which has not nearly enough baseball.