Value and Price Are Nearly Unrelated

Apple CEO Tim Cook offered this advice, “Price is rarely the most important thing”

Realistic thinking is about value and the cost to get the value you want. In that environment, you must know the value you need, and you must know what you must give up to get it. Cost

Price will be part of cost but not the only one. According to Tim Cook rarely the most  important part.

Price is a poor indicator of value.

Consider you are on a place crossing the prairies and the engines fail. The captain advises you need not worry, the stewards will be renting parachutes. When your chance comes you ask the price of the rental. The steward says you have two options. $100 and $50. Being wise you ask the difference. “The $50 ones work half the time, the $100 ones every time.”

Price is a poor indicator of value. If the price is lower something is likely missing. If you don’t know what, you will sooner or later become a victim.

Nineteenth century English philosopher John Ruskin has some ideas for your consideration:

“A thing is worth what it can do for you, not what you choose to pay for it.”

“It’s unwise to pay too much, but it’s also unwise to pay too little. When you pay too much, you lose a little money ….. that is all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was bought to do. The Common Law of business balance prohibits paying a little and getting a lot … it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that, you will have enough to pay for something better.”

“There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey.”

The takeaway

  1. Price should not be your first consideration.
  2. Lower price usually results from taking away.
  3. Understand the value you need. Durability, convenience, support, fit to purpose, fashion, additional seldom used features, and more.
  4. Understand the cost of missing out on some of the values you prefer.
  5. Only then decide what you would give up to get what you want. Could be money and some of the other value. Maybe convenience.
  6. Cost is the other side of value. Price is just one part of cost. Know value. Put price into its proper place in the equation.

I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email don@moneyfyi.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: