When my wife and I had new friends over for dinner they brought wine that costs about $16 per bottle.
Since we normally buy wine for $3 to $6 I looked forward to popping the cork on their gift.
Sadly, it was worse than our usual cheap stuff.
Apparently our experience is not unusual.
One study involving 6,000 blind tastings of wines found that “correlation between price and overall rating is small and negative, suggesting that individuals on average enjoy more expensive wines slightly less.” Yes, tasters found the expensive wines to be worse.
A higher price doesn’t always mean higher quality.
On the other hand, I’ve had $15 running shoes fall apart after a week of hiking in Colorado, while every time I buy $90 shoes (on sale for $45, of course) they just kept going and going for many months.
Often price really is a reflection of quality. So when does a higher price mean higher quality?
When is it meaningless? When does a higher price mean lower quality?
And how much more is that quality worth to you anyhow?
How do you balance the whole quality/price equation?
Start With the Obvious
Some things have obvious differences in quality, and you clearly get higher quality by paying a higher price, at least up to a point (more on that in a moment).
For example, you probably don’t want to buy the cheapest…
- Carpet cleaning
- Eye glasses
- Kitchen utensils
- Legal help
- Pet food
- Soy sauce
- Toilet paper
I learned my lessons the hard way for much of that list (don’t ever buy the cheapest mattress).
Other lists of things not to skimp on agree with me about shoes and mattresses, and also include items like home maintenance, tires, and pens.
So should you just buy the most expensive of these products and services?
The Degree of Quality Rarely Correlates Directly to the Price
A $50 pair of jeans is almost always of higher quality than a $10 pair.
But you might not find a difference in quality between $50 jeans and ones costing $30, so the correlation is not consistent.
And if you pay $200 for jeans you’re probably paying for a name rather than higher quality.
Ideally you want to find products and services that fall in the “sweet spot” of “lowest price for sufficiently-high quality.” That might be the $30 jeans in this example.
The Value of Higher Quality is Personal and Contextual
If you just need pants to paint the house with, you might choose those $10 jeans.
“Value” has to be determined by your needs and desires.
For example, dollar store containers are low-quality, but they work fine for organizing my garage stuff.
On the other hand, I paid $220 for a sleeping bag instead of $20, because I valued the quality in that context.
To find the right balance between quality and price (that sweet spot) for your purposes, try this when you’re considering buying something:
Start with the cheapest option and work your way up in price, asking yourself for each one, “Will this work for my purposes and not leave me with regrets?” Stop only when you get to something for which you get two honest “yeses.”
Quality Can Be Measured Many Ways
My wife and I got neck pains from our $4 pillows, so we bought $25 ones to replace them.
They looked better and they were made better. They felt better too — but only because they were new.
In six months they were flat and giving us neck pains.
Quality can be measured in many ways, and in this case the quality of comfort was no better, and the quality of appearance was irrelevant inside a pillowcase. The higher-quality construction just meant they lasted twice as long as the cheap pillows.
But since they cost six-times as much it made more sense to buy the cheap ones twice as often, which is what we’re doing.
The lesson: Consider the various aspects of “quality” and which are most important for you and the purpose of your purchase.
When to Buy Cheap
You have to decide what level of quality you’re willing to pay for according to your needs.
But there are some general categories of products and services where the cheapest is often the best.
Here are a few examples.
Fresh Fruits and Vegetables – Prices are generally lowest when they’re in season, which is also when quality is the highest, because of shorter shipping and storage times.
This is an example of when paying for expensive items may get you lower quality.
Weekday Movie Matinees – We find the cheaper matinee showings provide a higher-quality experience during the week, because kids are still in school.
Greeting Cards – If it says what you want to say, any other measures of quality are largely irrelevant.
Wrapping Paper – Yes, the expensive stuff is higher-quality, but is it worth it?
It’s just going to be thrown away.
Costco Liquor – According to the Huffington Post, Costco’s “Kirkland Signature” liquors are made by brand name bottlers.
The vodka is from Grey Goose, the bourbon is from Jim Beam and the scotch from Macallan 18.
Gasoline – Gas is gas, so why pay more for a brand name?
Generic Medications – Consumer Reports says generics are generally of the same quality as brand-name drugs, and concerns about them being made overseas are irrelevant, since the name brands are almost all made overseas too.
The Best Way to Solve the Quality/Price Equation
For large purchases it makes sense to consult with guides like Consumer Reports.
They routinely find cheaper products that are of higher quality than more expensive ones.
But for many things, the best way to determine when to buy cheap and when to pay more for higher quality is to try several options.
For example, we found that the cheapest coffee on the shelf at Walmart is horrible, but the second-cheapest is fine.
It was an inexpensive experiment that’s saving us a lot of money over time, versus just buying a more expensive product.
The number one rule for finding the right price/quality balance: Experiment!