Get what you pay for?

March 2021 - Get what you pay for?

Through the course of time, the adage that higher prices equate to superior quality has been widely accepted. This perception likely stems from the prevalence of deceit and mistrust in markets of the past, leading consumers to believe that a discounted price was indicative of subpar quality. However, in today's modern consumer economy, trust and customer service have become more important factors, and global competition and economies of scale have driven down prices for the benefit of the consumer. As a result, the relationship between price and quality has become less clear-cut.

This concept is further exemplified by the principle of diminishing returns, which states that the incremental benefit of a good or service decreases as the quantity consumed increases. For example, a pair of GUCCI shoes may cost £400, while a similar pair from Uniqlo may cost only £7.90.

It is worth noting that some products, referred to as "high magnitude" goods, offer a one-time value that may justify a higher price. On the other hand, "high measure" products, which offer recurring value over a prolonged period of time, may be worth paying an initial premium for, such as a laptop, glasses, shoes, or a bed. As the saying goes, those who live below their means enjoy a freedom that those constantly striving to upgrade their lifestyle may not understand."