Still buying into the idea that you get what you pay for? Let's discuss why I think this is bogus.
As I sit in this beautiful backyard nook we’ve created—the cascading grapevines bred to thrive in the harsh realities of Texas dirt, and a pot of vibrant, magenta-colored petunias a background to my thoughts—I am reminded of one of my financial pet peeves. You see, I purchased that petunia plant for $1.00 off the clearance rack at our local Lowe’s store. It was still in bloom at the time, but someone had marked it unworthy of further watering and effort, presumably because it had peaked and would be a bother to sell. That was two months ago. Ever since bringing it home and planting it in our little oasis it has managed to produce a continual flow of piercingly gorgeous flowers for us. All for a buck.
Staring at these flowers and knowing what I paid for them brings up an old sore spot for me: the idea people buy into that “you get what you pay for”. Over the last several years I have seen this phrase being irresponsibly thrown around in two different ways: as justification for spending more on a particular purchase despite not having the funds to do so, and as an “I-told-you-so” spit of wisdom when someone else likes to rain on your parade after a frugal fail (and yes, I’ve had a few frugal fails). Call it inefficiencies in the market or really whatever you want, but there are multiple opportunities where you can either overpay or underpay for something. Proving that the phrase “you get what you paid for” is many times incorrect is not that difficult to do.There are multiple opportunities where you can either overpay or underpay for something. Click To Tweet
Expensive Does Not Automatically Deliver Higher Quality
I’m sure we all have examples in our own lives or have heard stories from angered family members and friends who have overpaid for something that turned out to be of poor quality. This leaves an especially sour taste in our mouths after we find a cheaper alternative somewhere else with the same, or better, quality. Nobody likes to feel duped. Magazines like Consumer Reports are littered with these scenarios where they test-drive a range of products in any given category and usually end up finding that several lower-costing items outcompete higher-costing items (note: you will only be able to view the “buying guides” through that link unless you have a subscription; also try out Cheapism.com). In my own life, I’ve seen this during our home-buying process when we looked at 19 different houses. The 19th home was far superior in quality and location to all the others, and we are so happy that we held out because it was also nearly $30,000 cheaper. Another example is when I conducted research for my article on disposable clothing last year. I was drawn to a peacock-colored shirt on the rack at Express, I store I admittedly had not been to for over ten years. It fit well, I loved the color, and I purchased it. Just three washes later, a small but noticeable hole like the kind you might find in a cheaply made Target shirt appeared. Except that the Target shirt would probably have only cost $8 instead of the $30 I had shelled out. Boy did I feel duped.
Market Inefficiencies Enable a Life of Frugal Decadence
The more enticing market inefficiency is underpaying for items and services while still reaping the same great quality. There are opportunities everywhere—clearances, foreclosures, promotions, coupons, liquidations—that allow for the frugal decadent lifestyle our household and many others enjoy. Examples are generic prescriptions that are federally regulated to include almost the exact same ingredients at a fraction of the cost of brand name prescriptions, seasonal price drops such as purchasing homeowner’s insurance during non-hurricane season versus hurricane season, finding people with time constraints who need to liquidate something quickly (i.e. people on Craigslist who are selling close-to-new appliances at severely discounted prices because they were only in an area on business for a year or so on the company’s dime), people breaking into their field who are willing to offer you a much lower price for their services in exchange for reviews/experience (this worked beautifully for our wedding photos, which were taken by two college photography students for a total of $250), etc.
Sometimes marketers and salesmen increase the price of something merely to feed off of our perceptions of the phrase “you get what you pay for”. Just look at the wine industry, where perhaps the cheapest wines are not the best, but the most expensive wines also do not rate highly in blind taste tests. If you learn to identify these market inefficiencies, then you can avoid paying full price for almost every purchase that you make. In the meantime, sit back, put your feet up, and enjoy a $12 bottle of champagne (without the label, of course); it turns out that it is better tasting than a $150 bottle of Dom Perignon.