People confuse price with cost. Price is a simplifying assumption, and as such fails to fully describe cost.
Cost is the opposite of value or benefit. Like in Cost-Benefit analysis. If you don’t fully understand cost, cost-benefit will be a failing exercise.
Suppose I buy a new audio headset. What do I value?
Comfort, bluetooth rather than corded, long battery life, quick recharge, audio response, convenient controls, warranty, and way down the list – fashion. Your values and their weighting are likely different.
Price is what I have to pay in money to get the things I want, but that is only the beginning. What about convenience? Ease of access to buy? Free parking? Convenient hours? In stock? Knowledgeable staff? Can I return it if it turns out to be unsuitable? Does the vendor take credit and debit cards?
If I get get the comfort and a good battery, but not so much convenience and durability, I will adjust the price I would pay to be suitable to me. If I don’t get comfort, it likely can’t be cheap enough. If there is too much fashion, I would likely want to pay less.
Price is part of cost but not all of it. By that reasoning, low price is not a value.
People overrate price
John Ruskin had it figured out 150 years ago,
Be sure you get the values you want and understand what you must give up to get them. Only then can you reasonably consider how much money will balance the deal.
Recall Moe Margles’ Law – “Cheap is expensive.”
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