On the journey that is your finances there's many thoughts and considerations that you may not even know you're making! The cost vs. price dilemma is one of those.
What is cost vs. price
Imagine you're walking into your local electronics or clothing store and you see the high priced TV vs. the budget TV or that expensive little black dress vs. the inexpensive sleek red number. Which option would you pick?
Depending on your upbringing, some of you would have said option A the higher priced option & some would have said option B, the cheaper option. Neither are wrong however the great motivational speaker Zig Ziglar explains it here in his video on the "The Secrets of Closing the Sale". It talks about where by buying the cheaper option you may pay a lower price however if the item ends up not being up to standard, you may need to replace it sooner, which will increase the overall cost in the longer run. There are exceptions to the rule, which we'll go over below:
As with most other questions in life there are exceptions
- When it comes to experiences (such as holidays, spending time with friends or family), price vs. cost should not likely be the main consideration, this should be determined by you. The price vs. cost question should be asked mainly on products and some services
- It will depend on the item as well. While generally for the high ticket items like a car, electronics or clothes, the cost vs. price question should be considered. When buying a loaf of bread for example, it is not likely to have a significant quality and / or financial difference.
- Decide on why you're buying what you are. Make sure you are not using the cost reason to keep - up with the Jones'.
- Remember that life will go on if you aren't able to get it right :)
- As with most questions; be clear on your goals when you consider the cost vs. price decision
- Paying more for an item will not always give you better quality however paying less may also result in lower quality
- It will take time to adjust your mindset, go easy on yourself initially
Thanks to Sam at Financial Samurai for inspiring this article on curing the cheap!
Which items do you decide to spend more on to get better "quality"?
What are your thoughts on cost vs. price?
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