Wednesday, December 31, 2008

Value vs. Price - wise shopping

We live in a price conscious world. Advertising is filled with claims to low price, sale, save money and other catch phrases aimed at getting our attention. In every shopping situation, whether you are purchasing fast food or a new home, there needs to be a balance between price and value. Sometimes the lowest price give no value. Part of being prepared for hard financial times is recognizing the difference between the price of object and its value.

On the first level, price is based on the marketplace. Price is what you will pay or what someone else will charge for a specific product or service. Price comparisons have become ubiquitous in our Internet society. You can search for an item in Google and almost instantly have a price comparison from up to hundreds of vendors. However, the key here is that you have to be aware that this price comparison system exists. If you haven't even done so, trying putting a product into Google Product Search (or any of many other similar online services). The range in price can be surprising. For example a Canon Digital EOS 40D Camera has a $600 spread in prices. Finding the best price is no longer an issue in our computer driven world.

Price can be a trap however. Many times variations in price reflect actual variations in the quality of the product, it availability, or accessories. Also, price comparisons only work with mass produced products. It is very hard to compare the price of two unique hand woven rugs, for example.

In all your searching for the best price, do not forget value. Considering value, the first question to ask yourself is this, what value has this product to me or my family? Can I really use the product? Do I need the product? Can I purchase something else that will work just as well and cost less? What would happen to me or my family if I did not buy the product at all? How long will the product last and will I have to purchase a replacement? Is this something I want to store or fix? None of these, or many other questions are answered by focusing on price.

I often reflect on these questions when I remember gifts given and received for holidays and birthdays. Truly, I can think of few things that had any lasting value, particularly with toys some of which were discarded or broken before the day was finished. One good reality check is to go out and look in your garage or storage room. Is there anything there that you don't need or are tired of storing? Have you ever made a purchase only to discover that you already owned what you purchased? If not, you are very fortunate indeed.

Shopping can be an addiction. We can drown in our own refuse. Let's look the value of purchasing new items and less at the price. Real security, that can overcome fear, comes with a balance between our needs and our wants.

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