You are considering purchasing a membership to a store that offers bulk discounts to its members. If you expected to save $50 a year (indefinitely) and the market rate was 12%, at what price would you be indifferent to the membership? What if the membership cost $200, how much would you need so save each year to make it worth it?

To be uninterested in a membership at a retailer that provides bulk discounts and the market rate was 12% you’d need to save $416.67/12% or $50 each year to make the membership worthwhile. To make the membership worth it, you’d need to save $200/12% = $1666.67 a year.

Therefore, if you are expecting a savings of only $50 per year from this particular store’s discounted rates – and assuming the market rate will remain consistent – then it would not make sense financially speaking to purchase this particular membership. If the annual savings is greater than $3333.34 (or 17 times your initial payment), it may be worth purchasing.

Ultimately, when considering any type of subscription service that offers discounts based on usage or frequency – such as a members-only store – research should always be conducted beforehand so an assessment can be made as to whether or not these types of services are truly worth their cost.