Mistakes I Made #16 – Not Understanding That You Get What You Pay For. You Do.

When someone tells me that you get what you pay for, I can’t decide whether it’s a positive or a negative thing. I think to most it means that if you spend less, you get less and vise-versa.

I will however, challenge that. It doesn’t necessarily mean paying less automatically equates to low quality and little value for money.

Let me guide you through my thought process so that you can see where my opinions come from.

The Perception of Value

Value is relative, and a very simple statement to justify. As a man, we often don’t appreciate the value of a high-end French designer handbag as the female form would often do.

Simply put, a bag to me is merely something to hold my personal belongings.

To a discerning female consumer, a designer bag is more than just a bag, it’s something that associates class, aspirations and yes to some extent, a sense of success.

If you can afford a designer handbag, then it postulates wealth, great taste and style.

On the flip side, men often go gaga when it comes to cars, especially when we go through a midlife crisis. Buying a vintage convertible is considered a cult classic and worth the money you pay for it.

We will even go so far as to call it an investment just to justify why it costs more than a brand-new entry level car does. It’s not about value for money. It’s about what you get for your money, an experience.

I suppose you can argue the same for a wedding dress, your personal vacation or your favorite smartphone. There is however the simpler association to the coin-phrase ‘you get what you pay for’.

Here buying something for less can mean buying ‘crap’. Like our handbag example given above, you can buy a bag that looks the same as a designer handbag, and it can even have the same trademark, but the difference here is that it costs a fraction of the price.This is where value falls into a grey area.

Counterfeit products are so popular because it gives you the opportunity to own something desirable without breaking the bank.

It’s often also low quality and it quickly wears out versus the high-end product that was crafted with the best materials but that costs you an arm and a leg. Yet, some consumers don’t mind. They would rather ‘fake it’ and feel like they have made it, even if the bag completely falls to pieces after a few weeks.

This forces the consumer to go out and buy another one. The term ‘you get what you pay for’ clearly demonstrates that cheap is often bad, yet people will still fall for it.

The Value of a Brand

To sort of understand value, we must talk about what a brand is.

The term ‘Brand’ according to Wikipedia is defined as “a name, term, design, symbol, or other feature that distinguishes an organisation or product from its rivals in the eyes of the customer”.

People associate ‘value’ to a brand they recognise and formed an association with. A good example here would be to compare people’s perception of value when buying a car.

If you had to ask someone which car manufacturer they would trust more if the only two options were either a German or Chinese brand. Both could have either good or bad products, but that doesn’t matter.

What matters here is what is perceived as valuable. In my humble opinion, I will always choose a German brand over a Chinese brand as I have often found any German product to be of excellent quality.

I can however, attest that this wasn’t always the case when it came to products that were manufactured in China.

In the 1960’s, Japanese cars were not favorably viewed for its value and good quality. Yet, a decade later perceptions started to change. Buying Japanese was considered a wise choice as anything made in Japan was seen as good value (no matter the costs).

In the end the consumer must weigh up the pro’s and con’s. Do I buy the cheap car and save now knowing it’s going to start giving me problems, or do I invest in a trusted brand that will give me more peace of mind and reliability in the long term?

The same could be said for second hand cars. Consumers will often weigh up the pro’s and con’s of buying a second-hand car at a dealership that doesn’t offer warranties, yet is cheaper versus the dealer with a reputable name that isn’t as cheap but offers a warranty to give you peace of mind. You must decide if it’s worth the gamble.

Recognising Quality Over Quantity Despite The Origin

Let’s have a look at another case where the brand defeats the perceived value, despite it being manufactured in China. Almost all mobile phones are manufactured in China. Over 90% of all mobile phone batteries also come from one Chinese manufacturer.

Well known South Korean and American mobile phone manufacturers (yeah, I can’t say their names but you know who I am talking about), are the world’s top two mobile phone brands.

People often flock to be the first to get their hands on the latest release, even though there aren’t any real differences to the previous versions of the product.

But because it’s the latest people desperately want it because they feel that the exorbitant price tag for these mobile phones are worth it. I on the other hand, will rather wait it out until the price drops and then buy it. I’m not that desperate.

Other mobile phone manufacturers that are also produced in China, offering the exact same specifications don’t sell that well.

The perception of value is not the same. Then there are numerous mobile phone brands that are dirt cheap and the quality is poor. Yet people will buy it because of the price, being very happy to replace it a few months later.

The Obsession With A Good Deal

Here we come to true modern-day consumer dilemma, buying something we don’t need but want.

The Black Friday sale originated in the United States and has been spreading across much of our consumer driven economies.

This is a fascinating phenomenon. People literally go crazy, some camp outside the store to ensure they are the first in line, people will fight over a bag of diapers that are only marked down by 5%, and stores often suffer damages due to the force of the crowds.

Often, these discounts aren’t that much if you had to be honest. Yet, people perceive it as a rare opportunity to save a ‘buck’ and will try to get their hands on as much of it as they possibly can. I would rather pass thank you.

In most cases buying cheap often results in an expensive purchase long term as was the case with our fake designer bag.

The Moral of The Story

In the end, we are the only ones that can judge what our needs truly are. We often try and talk ourselves into a sale or out of one too, but what is important to consider is the value you will get when making a purchase.

If it’s worth saving money just to deal with the consequences of that later is up to you and me. What I hope you’ve learnt, is that price doesn’t always determine quality, but it does ring true in most cases.

Maybe next time you’ll think twice about buying that bargain when come across your next deal.