How Do You Value Your Money?
October 18, 2007
How do you decide how much money things are worth to you? How do you decide when you’ve spent enough?
eBay Discounts
I had an eBay customer ask recently for a discount if they bought two of the same item. I knew how much I stood to make with and without the discount and both amounts fit the profit margins guidelines I try to follow for all sales. On one hand I wanted the sale so maybe it was smart to offer a discount to close the deal. On the other hand, I try to maximize the amount I earn off each sale and a discount would drop down the margins.
After giving it some thought I informed them there would be no discount and they bought both items anyway. This transaction got me thinking about how it is that we value our money and how we decide what we’re willing to pay as consumers.
Valuing Money
This lady liked the price but it didn’t hurt her to ask for a discount. She may have even paid more for the product if I’d been asking a slightly higher price. When you’re in the store or online browsing for a purchase, how do you decide how much is too much? Some people spend $10 bucks for a pair of jeans on the sale rack at Old Navy while others pay $675 for Diesel Denim Gallery jeans. The end product is pretty much the same exact thing, I don’t care how you look at it, jeans are jeans.
What makes a cheapo like me think $20 jeans are too expensive and a big spender in New York think $675 is a rational amount to pay for a pair of pants? If you looked around enough, you could almost always find the same thing you just bought for a little less or a little more. So how do we choose that magic number that makes something affordable for us?
All posts by Ben Edwards
MoneyNing & Lazy, it makes sense that the more expensive jeans are better quality and that some people value the nicer ones more, but are they enough to warrant a $655 premium?
I think it all depends on what makes you happy. To you jeans are jeans, but to others there’s a big difference between a $20 pair and a $600 pair.
What do I need, how much can I afford, what is the best value I can get?
– Mark
I’m by no means a “fashionist” and will probably opt to buy the $20 jeans and will never pay for $675 jeans but the two pairs are not the same. Many of the very expensive brands of fashion items (clothes, bags) have much high quality than the $20 jeans at old navy.
Some of that is how much we have, and some is how much we care. Some people put a high value on various things, with little concern for how much it costs. That might be ok if you’re floating in money and it won’t matter, but somebody in a more normal situation just might lack discipline or even knowledge.