Pay Too Much 115

Posted In Money

Have you ever inherited something that’s really old? When you held it, did you notice that it’s different than what you can buy at the store today? Chances are your grandparents saved up for quite some time to buy it, and that’s why it’s lasted until now.

Often something that costs twice as much doesn’t perform twice as long, it lasts ten times longer.

When you multiply this over a lifetime, when it becomes the default, rather than the exception, you get more for your money.

People buy the cheapest stuff so they can afford to buy more with their money. But because more expensive stuff often provides more value in the long term, paying more means you can actually buy more. When you buy a John Deer or a Snapper you don’t have to replace it every other year like that random wally world lawnmower.

Gear

High end gear lasts a lifetime. Just like that old watch or tool that your grandfather passed down, the stuff made by real craftsmen and engineers will be working years from now.

Instead of rewarding copycats who make lower quality rip offs, you are rewarding the real engineer who developed or perfected a product. In the long term, this means we’ll have more of those real engineers and fewer garbage products.

The best retailer, the best products, and the best service providers usually guarantee your happiness for life. These products fail less, yet you can get them fixed forever. I buy camping gear from REI and backcountry.com. And 10 years from now if I decide I don’t like a tent, I can return it.

Overpaying means getting exactly what you need, often custom made to your specs, not some imaginary average person.

At the end of the day you end up with a very few items that you deeply love, rather than a house stuffed with junk that is worthless to you a year later. Life is simpler.

Appreciation

Most of the things we buy now are disposable. Your new phone will be garbage in 3 years. What if we started buying things that weren’t disposable, that lasted for generations? How would this impact us in the long term?

Expensive stuff appreciates in the long term. The best guitars from 50 years ago are worth 50 times what they cost originally. This means we can get paid to own stuff we like.

Services

When you overpay, you are first in line. Your stuff gets made first, and the other guy’s stuff gets done when there’s time. It gets rushed. Many of the intangible pieces that make up the quality of a product or service go out the door when we’re getting a deal. They’re doing a favor and sometimes when we bargain, people resent us.

What if we always sought out the best of the best? Rather than hiring the guy down the street to do our marketing, we go out and find the best firm in the country? Won’t the best firm end up paying for itself even if it costs way more? At the same time, won’t our lives be easier?

Employees

Top pay attracts the best people. Although freedom and recognition generally trump pure dollars for employee happiness, those that consistently pay their employees less, end up losing their best people.

Employees don’t ask for raises. On the infrequent occasion that they do, they’re not really asking for a raise, their telling you about the new job some place else that they found, which comes with a raise. It’s your job to make sure they never have a reason to look for that job.

Often companies that can’t afford to hire the best people end up this way because they don’t hire the best people (who will generate more money). If your business is struggling, look at your payroll. Do your employees resent you? Are they making a sacrifice to work for you? It is your job to find a way to keep them thrilled to work with you, and monthly pizza parties aren’t going to do it.

Services and tipping

No one cares about $5 unless it’s a tip or part of a meal. This is so weird to me. No one haggles over $5 on the price of a car, but it seems that everyone needs a tip calculator to determine if they should pay 21.50 or $22.00 for a meal.

I usually eat at the same few restaurants all the time. They’re maybe 10% more expensive, usually locally owned, and the food doesn’t come out of a frozen pre-made bag before being tossed in the oven. I never tip less than 20%, and I’m not an asshole….at restaurants.

I always get great service. The staff who isn’t even waiting on me comes over to say hi. They know what I’m going to order, and if I forget something, they know it.

This doesn’t happen at Applebee’s or McD’s.

Overpaying in small ways is often not financially significant to you, but it seems like a lot to someone else. Over tipping makes $2 or $5 seem like a lot of money. This multiplies the value of your money.

By the way, a McD’s cheeseburger has about 2.4 oz of beef. If we assume that ¾ of the cost of the cheeseburger is in the beef. For a 99 cent burger, that’s $6.60 a pound for the lowest quality beef you can buy. You’re not saving any money by buying 99 cent cheeseburgers.

Changing our mindset

People who constantly try to always get that great deal end up spending all their time chasing those deals and never actually get things done. I’ve seen people do this their entire lives, and it is debilitating.

When we change your mindset from getting the best deal to getting the best quality, it changes the emphasis from shopping to deciding what’s important. Because we only buy quality, we are forced to wait until we can afford what we really want. That wait time leads to better decisions, and it forces us to make do with what we have. Often making due or improvising means we can avoid buying things we don’t need, thereby saving money.

This doesn’t always work. Sometimes a cheaper product is actually better. But consider removing price as the default decision criteria.

My favorite pair of jeans gets worn 10 times more often than my other jeans. If I did away with the other jeans, I could afford to buy more of those things I really love. What if all of our stuff was mind blowingly awesome, even if we had way less of it?

Lead image courtesy moneyblognewz