When I first heard the term perceived obsolescence, I had no idea what it meant.
I had only heard about planned obsolescence because it's how technology companies have kept me coming back for a newer product model.
So I want to explain what planned vs perceived obsolescence is, how it can keep you from reaching financial independence (FI), and help you avoid this pitfall.
What Is Perceived Obsolescence? (Definition)
Perceived Obsolescence is when a person is persuaded into replacing an item before the old one has lost its functionality. It can be as simple as the old item becoming unfashionable or less desirable.
The old item is perceived to be obsolete when it is not.
The perceived obsolescence is usually due to the item's aesthetics instead of functionality.
Perceived obsolescence is prevalent in industries like fashion and technology.
Companies aim to convince you to think about their products as status symbols.
Therefore, you must consistently upgrade to the latest trend or model sooner than necessary to keep up with appearances.
Planned vs Perceived Obsolescence (With Examples)
The main difference between planned and perceived obsolescence is that the product is functionally obsolete with planned obsolescence.
This decrease in functionality is by design, therefore, “planned” by the manufacturer to get you to buy a new product.
Planned Obsolescence is when a manufacturer designs their product to have limited use or not function after a specific time. Planned obsolescence leads to a frustrated consumer.
Perceived Obsolescence is when a person is persuaded into replacing a product before the old one has lost its functionality.
This is done by changing how items look, making it evident to society that you're not keeping up with the latest trends.
Perceived obsolescence leads to an embarrassed consumer.
Planned obsolescence has received much more attention, but perceived obsolescence can be just as harmful to your wallet.
So let's go over some examples of both to avoid them altogether.
Examples Of Planned Obsolescence
There are several examples around the world of planned obsolescence.
However, two major ones stand out.
Lightbulb Lifespan Reduction
The first one is a reduction in the lifespan of lightbulbs by the Phoebus Cartel.
In summary, this is when international business people gathered to agree upon a shorter lifespan lightbulb to increase sales.
They engineered the lightbulb to burn out after 1,000 hours.
This was a significant reduction from 2,000 hours, which was the standard.
They did this by not just making an inferior product but purposefully making a product that wouldn't last.
Actively researching how to make a lightbulb burn out at exactly 1,000 hours.
The details of this planned obsolescence were discovered years later.
Apple Slows Down Older iPhones
The second example of planned obsolescence might be more familiar.
When France investigated Apple for planned obsolescence, it came to light as a crime under French law.
So no, you weren't crazy when you thought your iPhone was acting up whenever the new iPhones came out.
The prosecutors alleged:
“the slowing down of older devices seems to have the deliberate aim of pushing Apple customers towards purchasing the new model”
Apple finally admitted to the allegations and said they deliberately slowed down older iPhones through software updates.
Other Examples Include:
- Low-Quality Clothing
- Textbook New Editions
- Protected Ink Cartridges
- Irreplaceable Batteries
Examples Of Perceived Obsolescence
Perceived Obsolescence won't typically end in a court battle. However, this type of obsolescence exists within our societal norms and is similar to peer pressure.
Companies again work hard to drive perceived obsolescence.
They create the illusion that their latest product is necessary to fit in with the cool crowd.
Where we see this most is in fashion and technology.
However, I've also experienced it with the car that I own.
Family and friends have asked me, “You're still driving that old 2009 Toyota Corolla?”.
I politely answer “yes” and continue my journey to Financial Independence (FI).
Feeling embarrassed or ashamed is familiar with perceived obsolescence. That's how it's supposed to make you feel.
Learn more about the difference between the Rich vs Wealthy.
The embarrassment would be wearing clothing out of style in the fashion world.
The fashion industry has capitalized on this by creating more seasons.
There is a new trend every month or week instead of the typical four seasons (spring, summer, fall, and winter).
This keeps the consumer constantly looking for what is “in” and replacing the old with the new.
As for technology, an example would be using an iPhone 3 years behind the latest version.
We've already discussed how Apple used planned obsolescence to sell more phones, but they've also used perceived obsolescence.
Changing the color or style of the newer version makes it more evident who has the latest iPhone.
Having the new iPhone signals that you have a specific “status.”
You can afford to upgrade; therefore, you save yourself the embarrassment of having the oldest phone among your friends.
There is nothing functionally wrong with the clothes or phone in both cases. You would be comfortable using your current product without the pressure to replace/upgrade.
Other Examples Include:
- New Car Models
- Flat Screen TVs
Perceived obsolescence and the pressure to upgrade can prevent you from reaching financial independence (FI).
Next, I will show you why and how you can beat it!
Perceived Obsolescence Is Making You Broke
My mission here is to help everyone achieve financial independence.
So when I see an issue like perceived obsolescence keeping people broke, I feel obligated to step in.
If you feel like you are struggling financially, it's time to look around and assess if perceived obsolescence is the reason.
For example, let's say you've upgraded your phone every year for the last 10 years. The average cost of an iPhone is $758.
That is a total cost of $7,580.
If instead of upgrading every year, you upgrade every 3 years. Your total cost for a phone would be $2,274.
A difference of $5,306!
If you had invested that difference over 10 years with an average return of 8%, you would have… $8,232!!!
That is $8,232, which will only compound to an even higher amount over the years. That is only one example.
Imagine applying that to all aspects of your life, such as clothes, technology, cars, and appliances.
If you take all that extra money and invest it, you will be well on your way to financial independence.
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I see too many people buying the latest iPhone regularly when instead, they should invest regularly.
Avoiding The Trap
Avoiding the financial trap of planned and perceived obsolescence comes down to being content.
Being content with what you currently own will help you fight the temptation to buy something new before it's necessary.
If acceptance into a social group requires you to buy the latest and greatest item, then maybe it's time to reassess if that group is really for you.
Once you are content with what you currently have, you no longer have to replace an item before it loses functionality.
Here are some more tips for avoiding planned and perceived obsolescence.
- Repair Before Buying New: Always look for ways to fix an item at a cheaper cost. This has the dual benefit of saving money and learning something new.
- Stop Buying Just To Buy: Sometimes, we put ourselves in bad situations. If you are trying to avoid perceived obsolescence, the mall is the last place you want to hang out. Avoid situations that trigger impulse buys.
- Buy Used: If you have to replace your current item because it's beyond repair, try buying used first. Many times you can find a deal on used items. You would also be doing a favor to our environment by reducing the demand for new shiny objects.
I hope this has helped you identify and avoid planned and perceived obsolescence on your way toward financial success!
If you still struggle, try to remind yourself how much better financial independence will feel over the latest shiny product that will lose its attractiveness in a year, if not sooner.