i was recently talking with a family member who is in the process of selling their home. like many people selling their homes right now, they are having a tough go at it. one thing that stood out from the conversation is that she is confused by the fact that they had more interest in their home (judged by showings and traffic at open houses) when the price was higher, and now that they lowered the cost, they have seen considerably less activity. my initial thought was that it all had to do with the way we perceive products. now, i am sorry if i lumped ‘you’ into the ‘we’, but people seem to naturally aim for the top of their price point, or think a product is ‘better’ if it costs more, and we generally exceed our initial budget when we make major purchases. well, we used to. how many times have you heard “we went over budget”, usually followed with a smile and nod to signify an understanding that that’s what was expected, or perhaps only one member of the couple is carrying on this way, and the other is looking down with a ‘i’ll kill you if you do this again’ look. wait, maybe that’s just on the house design shows i watch. um, i mean that r. tells me about…word for word. yah, she likes to try and memorize the television shows she watches and then recites them back to me. i agree it’s a little weird, but i humor her.
so, obviously i thought about this concept a few times today, and then came across this article written by derek thompson for the Atlantic (i have no idea who derek thompson is either, but know that he deserves the credit) the title of the article is “what you don’t get about college admissions”. the following section of the article was addressing whether colleges with higher costs associated with them are viewed by the public as better colleges.
“There is a prestige element. People make the false assumption that cost equals quality. Colleges are raising tuition because market research said they should. George Washington University in D.C. is a great example. They raised tuition because research showed that they had a lower tuition than American University, so students considered them worse. Now they have one of the highest tuitions in the country, and their applications are way up.”
the product remained the same, the cost went up, and people believe it to be better than before. i truly love this way of thinking. i love it for two reasons; it makes me laugh and I am tricked by it. i would be a total liar, which i’m not, or am i? or am i not a total truther (quick which president did you just think of?) if i didn’t admit to buying into this view of consuming. have you ever seen something in a store or online that you weren’t shopping for, it looks like a good product, has a insanely low price tag, and you pass it by because it couldn’t be of value – for that value? or, i guess, because you didn’t need it.
the flip side of this is that i love thrift stores and flea markets. i enjoy, as stated in previous blog posts, looking for that ‘jewel in the ruble’. this seems to make sense with my all or nothing, but getting better at middling, mentality. if i am getting a new garden hose – make it the best, or most expensive. if I am looking for a tissue box holder – make it the least expensive and weirdest.
i’m not sure what i’m trying to say. i am sure this is all basic economics. we all know that the price of something is only what people are willing to pay, and the value that you put on that ‘thing’ dictates whether you will spend more or less for a product.
here is a list of products that I think are worth paying more for – please feel free to add yours – glue sticks, staplers, underwear, food (seriously all food), I used to think sprinklers, but the four dollar one we got early in the summer is doing great, paper towel, cheap toilet paper has never bothered me, crayons, night stands, spatulas, and deodorant.