Dreamworker has a lifetime of successful business, relationship, career and financial experiences she enjoys sharing with her readers.
One of the keys to doing well financially is to be able to learn the real value of things. This is not easy to do because in most cases, value is subjective and depends on many factors.
Thus, when you are thinking about spending money on a product, especially if it is an expensive one, it’s a good idea to spend some time looking into the issues that go into pricing. These include but are not limited to
What Determines the Value of Things?
- ease of access
- production costs
- political influences
Any one of these can either positively or negatively influence an item's price.
A product that is made with better materials and craftsmanship is always going to have more value than one that is not. How much value, however, depends on the number of people who are willing and able to pay more to have it.
People also have to weigh the durability of an item when making purchasing decisions.
- Is it worthwhile to pay two times more for something that will last three or four times longer than a cheap copy that will fall apart after a year?
- How much more is quality worth in terms of real dollars?
- Is the manufacturer charging a fair price?
Those who take the time to do some research may find that there are similar products on the market that cost less, but they need to be make sure that the lower price does not reflect lower quality.
Remember when pet rocks were all the rage? They actually had little value other than the emotional one attached to people’s egos. People were buying pet rocks in droves, so this made others think they had potential value, but they did not.
Pet rocks, cabbage patch dolls, Ivy League hats and similar items sold because they were popular trends, but they had very little value.
Popularity makes many people think that things are worth more than they are, so they pay more for them, but spending money on such things is wasteful unless popular items represent good investments.
A few years ago gold and silver ownership was all the rage. The more people bought, the higher the prices went. Some people sold out at the right time and made good profits. Others waited too long and lost money.
When spending on big ticket items, people should set popularity aside and look at actual value. Doing this is one of the bet ways to protect your money.
The condition of an item plays a big role in determining its value. If you have two recreational vehicles of the same year and model that have the same interiors, amenities and mileage, the value of one can be considerably more than that of the other due to the difference in overall condition.
The unit that has been well maintained, is clean, does not smell, has no visible body damage, does not have any mildew or tank odors and is not leaking always has a higher value than one that has all of these issues.
Pricing guides do not reflect this, so consumers need to make sure that any product they buy is in good condition or is what it has been promised to be. The better the condition, the higher the value.
This applies to everything from food, houses and clothing to vehicles, daily use products and vacation packages.
Ease of Access
It’s common knowledge that the more difficult it is to get something, the higher its price. This does not mean it has more value. It only means that it costs more than it would if it was easy to find.
People pay fortunes for rare books or antiques because their value is in their limited accessibility. Some individuals like owning something that nobody else can own, and they are willing to pay good money to have it.
The only saving grace with these types of purchases is that they usually are good investments because the older they get the more they are worth because finding them becomes increasingly difficult with time.
Just imagine what the only remaining vial of a medication that can cure cancer would be worth!
The amount of money a company must pay in order to produce a product is a big determiner of price.
Getting an item from the factory to the store shelf is costly, and consumers must pay the tab.
However, the actual value is based on many of the things discussed above, so those who take the time to comparison shop often find that they can pay less in one store than in another for exactly the same item.
This is because overhead can vary greatly. Floor space, utilities, taxes, advertising, materials and employee costs all affect product price. Thus, those who shop in discount stores find themselves saving money when buying the exact same products that are sold by standard retailers.
If there are many people selling the same product, the competition between them will lower prices because they want to lure consumers into their places of business.
In many cases, the value of items is the same, but this is not always true. For this reason people need to take care when buying goods and services that cost less.
Businesses that have no competition can charge as they please. When they do, the consumer loses.
The lack of competition makes people think that certain items have more value, but this is not necessarily true. Price does not equal value. Competition can affect price, but it does not affect value.
People who pay attention to where they shop always do better than those who just shop randomly.
Politics can be a big determiner when it comes to value. The best example of this is the difference between the cost of prescription medications in Canada and the United States.
There is no difference in these products because they are manufactured by the same companies in both countries. Therefore the quality, popularity, condition, ease of access, production costs and competition do not affect the value.
What creates the price variation is the way in which each country’s laws are written. Canadians pay much more for taxes than do U.S. citizens, thus they have more benefits when it comes to certain things. Lower drug costs are among them. Canada negotiates with pharmaceutical companies to get lower prices, but the U.S. Government does not. So, while Canadians pay more to live in their country, they pay less for their medications (as well as other health care costs). Just the opposite is true in the U.S.
In Canada the value is what the government says it is. In the U.S. the value is based on the cost of research and development, competition, and the availability and effectiveness of medications.
What Something Is Really Worth
Since people have different views about the real value of things, it’s not easy to determine true worth.
However, by using the above information, closely examining products, reading reviews and talking to people who have purchased various items, you can get a pretty good idea about their dollar values.
In the end, it is you who determines what something is worth.
My mother wore a $10 wedding ring for all 56 years of her marriage. Nothing was worth more than that ring to her. I once offered to give her an engagement ring I no longer had use for, but she turned me down. The only ring that had value for her was the one that represented the love she shared with my father.
That's a story worth remembering when you are trying to find out how much something is worth. The value is not always in the item. It's often in our minds.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2019 Sondra Rochelle