You Get What You Pay For, Sometimes

How many times have we heard the expression, “You get what you pay for?”  It usually follows a negative experience with a product or service in which you scrimped in an effort to save a few bucks.  But it isn’t always effective to pay more for something in an attempt to get a higher quality.

Frugal people crave value, and are typically willing to pay a slight premium for something that will last.  This means to save money over the long term, frugal shoppers will spend a little more money than cheaper counterparts, but will score products of a higher quality that last longer.  Most people associate frugality with being cheap, but that is not necessarily true.

Cheaper not always lower quality.  When comparing two products many people automatically assume the cheaper alternative is of lower quality.  Not so.  Often times the best value, in terms of bang for your buck, is found somewhere in the middle–not the highest priced product, but not the cheapest, either.

To help demonstrate this idea, Consumer Reports recently developed the Consumer Reports Value Index.  The index I chose for this example shows the relationship between performance and price for rated flat panel televisions, and immediately you can see there are a number of models with low-medium levels of performance, but above average in terms of price.  So in this case, you don’t get what you pay for.

According to the index, the Samsung LN40A550 was the second-best performer in the category, “Best Values in 40″-42″ LCD and Plasma TVs.”  Seven other models cost more than the Samsung LCD, but only one outperformed it in testing.  If you really crave value, and are willing to give up a few performance points, the Panasonic TH-42PX80U did only slight worse in performance testing, but is significantly cheaper.

Aim for the middle. The television example supports what I typically do when shopping, even when I’m not armed with something like the Consumer Reports Value Index.  My strategy is reminiscent of that scene from Rocky IV where Rocky sees three Ivan Dragos (thanks to having his brain scrambled) and his trainer says, “Hit the one in the middle!”

I don’t typically go for the most expensive product, but I don’t automatically buy the cheapest one, either.  The Consumer Reports Value Index supports that strategy, as those products performing above average fell in the middle of the price range.  Both the cheapest and most expensive models fell well below the others in terms of performance, proving that sometimes you don’t get what you pay for.

What’s your general shopping strategy?  Always buy the cheapest option, or aim for the middle of the pack?

Comments

  1. I’m like you. I almost never buy the cheapest or the most expensive, and usually end up right in the middle. I’ve been burned by both ends of the spectrum. Seems it’s a lot safer in the middle.

  2. Nice post. Value is definitely the most important proposition when making a purchase. Do I value this as much as I value my two hundred dollars? Do I value another one for one hundred a complete hundred dollars less. I look for value in all my purchases. And I love consumer reports – they offer great insight as to where hidden value lies. For instance, based on a recommendation from consumer reports, we always buy Ultra Brite toothpaste. I don’t feel like I’ve sacrificed anything in cleanliness, and I don’t value fancy toothpaste at more than the 0.85 per tube that I pay for Ultra Brite.

  3. For me, it depends on what I’m shopping for. I know TVs pretty well, but I’m not an expert at them, so I probably did this very thing when it came time to buy our TV.

    If it’s computers or books or something I know very well, then it’s more likely I’ll end up closer to the “high end” in terms of quality, simply because I know the details.

    But in general I try to get the most value for the money I’m spending.

  4. I definitely look for value when I’m shopping. I do my best to read several review sites and then shop around for the best prices. I do tend to aim for the higher end, but only for certain items that I know I will have forever.

    Smaller, low impact items, I do go for the cheapest available.

    I’ve had good success so far, but there have been days where something did go wrong and I would say to myself, ‘well you got what you paid for.’

    I try and avoid those moments. :)

    Stupidly Yours,

    Matt

  5. I do a lot of research before making large purchases, but I have no problem spending more money to get a quality item that will last for years. I consider our family frugal in that we don’t buy a “newer, better” version of things every year or two. We drive our cars into the ground and keep most other items until they no longer work. Because of this, it makes sense for us to buy higher quality items (even if they cost a little more up front) that will last a very long time. I think we more than get our money’s worth out of these purchases in spite of the higher cost.
    Interesting topic to bring up; I can’t wait to read about how other people shop.

  6. It depends on what we are buying, but we usually go with the theory of trying to get our money’s worth. Sometimes that might be the most expensive, but generally I’d say it is the middle of the road since we don’t always need the latest, greatest with all the bells and whistles.

  7. Thanks to the joys & convience of the Internet, I usually comparision shop on-line. I check for product reviews and try to find the best price. Being able to read other consumer reviews is priceless!

    When it comes to toys & furniture I try hard to buy quality. I want it to last. With furniture, I buy pieces I love and know I will enjoy for many years to come. I don’t want to re-decorate every few years.

  8. If you look at this from the “predictably irrational” perspective, you will see that most product manufacturers design their best products in the mid-range. The low end is designed from the start to steer you towards an upgrade. The high end is designed to make it appear “too expensive for what you pay for.”

    So the mid-range is often the best place to be. My car, computer, cell phone, and even newspaper subscription are all in the mid-range. Thanks for the value index link. I’m buying a TV this year and this will come in handy.

  9. I like to follow the Second Cheapest Rule. I will seriously check out the 2nd cheapest thing in the category and then decide if I need to go up or down from there. This rule also works well in new restaurants when I can’t make up my mind.

  10. Good thoughts. The biggest thing I do when making a major purchase is research the heck out of it. I read reviews, talk with people who have or have had that product, watch video demos of the product, and do everything necessary to learn about it.

    He who has the most knowledge wins.

  11. I do pretty much the same things as FrugalDad and several commenters here. I, research the product before buying if it is even moderately expensive and try to compare to the best of my ability. I attempt to look for really cheap version of what I am buying and see if it isn’t even close to what I am looking for or if it’s just too cheap. I also will try and wait until there is a sale or a newer version is released and then buy the outgoing model (only if it has been discounted significantly).

    I’ve been known to utter the phrase “You get what you pay for” both when referring to cheap pieces of junk and when getting a really good deal on a middle to higher-end model that really works well. Heck, I’ve said it several times when referring to me and my wife’s used cars.

  12. Very few things give me greater joy than finding good value. Thus, I use a multi-pronged approach. For example, I recently found myself in need of a new pair of running shoes. So I typed a few queries in an online search engine and found reviews from runners’ magazines about the shoes that other runners preferred. Within minutes I had a list of 7 different shoe models that were mentioned often as superior quality running shoes. I wrote them down and started searched for those shoes on a few online clearance sports stores and e-bay. Within a half an hour, I had purchased a brand new (retail value$115) pair of superior quality running shoes for $42. Hmmm..feels like i’m bragging. To recap: Get the opinions of people who are knowledgeable about what you are purchasing (if you aren’t yourself) and hunt for the best bargain online!

  13. Sometimes it’s not about what you buy but when you buy it. I have been wanting some new clothes for a little bit now, and finally the Mrs. and I got around to the mall this weekend.

    Because of the poor economy and incoming spring merchandise I got some incredible deals. Like 75-80% off on name brand stuff!

  14. I totally agree – when my husband and I were dating, he was in rather desperate need of some clothing (we were in college and, needless to say, um, totally broke). I bought him a pair of denim jeans from The Gap. The jeans were well made and on sale, and I spent about $50 on them.

    When I gave them to him his first reaction? “But I’m not the kind of guy who WEARS Gap jeans!” His mom had always bought him jeans from Kmart, jeans which turned the rest of his laundry blue and then fell apart in 6 months. He was buying a new pair of jeans from Kmart every six months at $30 a pair.

    We’ve been married for three years now, and I gave him that pair of Gap jeans five years ago. Does he still have them? Oh yes he does. Because you’re right! You get what you pay for. I estimate that we probably saved $300 just by buying a pair of well-made pants, that were made out of quality materials. Plus, they looked a lot better on him than the ones from Kmart.

  15. @The Passive Dad, a definite yes on that one. My current television (a Sony 42″ LCD console TV) was purchased over 4 years ago. As it was a discontinued model, it was discounted and it had been a floor model, so it had an additional manager’s discount as well. I ran off with it for $1500 when new 42 inchers were going for $2800 or more. I’ve purchased many Sony items and have been quite pleased with the build quality of this one as well. It also has an audio filter that enables a “surround sound” mode which makes it sound much better than almost any new TV I’ve looked at. Unless it goes completely dead or I win the lotto, I’ll be keeping it for a long long time. It pays to wait or just look for older models — some can even be better than the new ones!

  16. Many items it does make a difference and some it doesn’t. All depends on your level of quality. For instance you can spend more on clothes for higher quality, but could be satisfied with something less. With TV’s, technology is increasing so lower brands can compete with the quality of higher brands. I still personally believe there is a difference, but someone like Vizeo is making a huge leap to compete.

  17. The majority of my career was in purchasing and I use the same philosophy in my day to day purchases.
    -Quality
    -Price
    -Service
    Even when I was spending millions of dollars of someone elses money I was frugal. There’s pretty much a component of all of these things in most everything we buy.
    Like Grant and others have mentioned, I do my homework first. I tend to low ball most purchases (except food) and rationalize it by the warranty coverage (if applicable). I rarely go any farther then my laptop to shop. I have a back problem that makes it difficult for me to drive or shop so I do 99% of my purchasing on-line.
    Thankfully, my kids are learning that you get more presents at Christmas if you buy used books & CD’s from Amazon or eBay. The savings usually buys turkeys for the local shelter or even a larger cash donation.

  18. For non-consumable ‘things’ that I keep for period of time, I tend to purchase upper mid range. Cheap is no good. However, I buy very few things (very few).

    For services, and also consumables (such as food), I tend to go with the cheapest.

  19. I also like you buy in the middle. Valuable lessons you get what you pay for and if it’s too good to be true, it probably is! Thanks for your post!

  20. I’m with the ‘do the research group’ and I also tend to buy toward the middle, usually leaning to the upper middle.

    Some things you can look at and see a difference in quality – like fabric of a t-shirt. I still won’t buy too expensive for those, because even the expensive ones will get stained. Better to go mid-quality and plan on replacing as needed.

    Some things you can see no difference, so it’s hard to tell.

    In the past couple of years I tried buying slightly more expensive Christmas lights – the little white ones. I was disappointed to learn from experience that they didn’t last any better than the cheapest ones. Now I buy the cheapest (preferably on sale after the holidays for pennies) and toss them when they go out.

  21. Your strategy is great but the marketing groups have already determined what you will do, so they ensure that the “middle” range product has the highest retail markup. Sometimes they will differentiate the product with something marginal just to place it in the “middle” range and entice you to pay the higher markup.

  22. This is true in most cases. My wife and I have gotten burned a few times by purchasing the “cheapest” item. Sometimes cheap is cheap. Looking at many types of product and shooting for the middle is probably the best policy. I do landscaping part time and I will pay more for Good Tools…they will give you good return in the long run.

  23. I research first with consumer reports. Then look for durability, quality, and ability to last forever. Then see if I can find the item at a garage sale or used store. I got a $400 sewing machine for $10 at a garage sale 4 years ago – good deal in my book and it’s stood up to the heavy use it gets.

    And never do I buy an item/vehicle in it’s first year of manufacture, as it seems the bugs aren’t worked out yet. I’ll buy it the 2nd year once the research opinions are out on the first year’s model.

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