Retailers have latched on to this idea and try to position themselves as the “value leader” in their market. Usually they do so by offering the cheapest prices possible. Think of McDonald’s dollar menu as an example.
What’s the real meaning of value?
But I think the real meaning of value has been lost as a result. As I determine the value of something I purchase, I think of two things: how much am I paying, and what am I getting for that amount. All the discount retailers seem like they want you to forget about the second part of the equation. We are told their products are the most valuable simply because they are the cheapest.
Price, however, is only one part of the value equation.
The Mac Example
I recently purchased a second computer as I’ve been spending more and more time working on various online projects. I’d been looking at Macs for a while but was having difficulty taking the plunge. I had never used the Mac OS, and more so was a little turned off by their higher prices.
But the more I researched the more I became convinced the Mac was the better deal. There were two main reasons I ended up going with a Mac:
- Customer satisfaction. In general I found that most people were very satisfied with making the switch from PC to Mac.
- Resale value. This was the biggest decision maker for me. I was amazed at how well Macs hold their value compared to PC’s.
Now, the point of this example is not to get into a heated Mac vs. PC debate, but rather to illustrate that even though the Mac was more expensive, I still felt it was a better value. Even though I’ve got my family on a tight budget and could have gotten a $300 PC, I went with what gave me the most for my money, not with what was the cheapest.
Consider product longevity!
The importance of this is that I believe if in my purchases I go with what is most valuable but not necessarily the cheapest, in the long run I will spend less money. Think about it, would you rather buy 1 pair of $75 shoes every 3 years or 1 pair of $15 shoes every 6 months? Retail would tell us that the $15 pair is the best value because it’s the cheapest. But math tells us the $75 pair is really the best value.
Of course there are times when the cheapest item really is the best value. For me, shampoo is a great example. If you’ll scroll down and look at my author bio, you’ll understand why I couldn’t care less about the quality of my shampoo . . . . I get the absolute cheapest shampoo I can find, because I get no added value from buying the more expensive stuff.
When cheapest makes sense . . .
For items where resale value, depreciation, and quality aren’t a factor, it will usually make sense to go with the cheapest price possible in these situations. These are usually highly consumable items such as toiletries, cleaning products, some food items etc . . . .
So remember as you make your purchase decisions to look at the overall value of the product you are considering. Remember that price is just one part of that value equation. Oftentimes items with the cheapest initial purchase price will end up costing you more in the long run.
What do you think? What are some things that you have purchased where it made more sense to go with the best value, but not necessarily the cheapest? What are some other things for you where the cheapest price really is the best deal? Meet us in the comments!