March 20, 2016

Balancing Frugality and Value

My willingness to spend money has increased the past couple of years. I hemmed and hawed about purchasing the the wine bottle wall art that decorated our dinning room walls with when Domingo and I first moved in together. Domingo had to convince me that it really wasn’t that expensive to buy both the white and red pieces. A few years later I lamented not having purchased a backup set. Sadly, they broke in our move not two years after that, thank you movers who put them in a box without wrapping them first.

The ‘I should get a back up set’ (or ‘should have gotten’ in this case) is the good I-wish-I-spent-more feeling. Lately I’ve had a few of the not so good I-wish-I-spent-more feeling. The reading chair we purchased for the office came cheap from Amazon. Sadly it both looks and feels as cheap as it was. I wish I had purchased a different chair, a nicer one. The deck furniture was similarly disappointing. It’s already has some rust after just one season of use. I can’t really bemoan the purchase of the Ikea couch. We got it at a basement bargain price for the apartment. We weren’t sure where we were likely to move, and I didn’t want to spend a penny more than I had to on something that might not work in the new place. It was the cheapest couch I could find, and meant to only be temporary.

Then there were the good purchases. The Mainstays table for the kitchen was a steal. The initial table I bought that arrived broken, only had two chairs and cost more. Our dinning room table was another great purchase, though the shipping and handling surcharge eat into the discount a bit. And, of course, I ended up liking our Christmas trees that were a bit of a gamble. I’m glad I didn’t spend one penny more on those items because it’s hard to imagine a different table or tree that I would have appreciated measurably more.

Reflecting on past purchases has me thinking about price points, and whether mine is at the right point. The lower the price point, the greater the chance of being disappointed with the product. (In general at least, price and value may be interlinked but they’re not interchangeable). The higher the price point the less likely to be dissapointed, but the greater the chance that another product may have been equally good for less. The greater the risk of over paying. There’s a trade off between paying as little as possible, and being happy with one’s purchases.

dissapointed missingout
Probability of being disappointed as a function of price point, and probability of missing out on a deal as a function of price point.

happiness
Putting the two charts together to get an idea of overall happiness.
Minimizing the probability of being disappointed means maximizing the probability of over spending and vise versa. The trick is finding the sweet spot where the both probabilities are in the acceptable range for your sensibilities.

I could lower my price point, but it means more back and forth. More returning items I’m really not happy with. More accepting items I’m marginally happy with. I initially assumed my batting average wasn’t that great. I’m starting to think my price point might be just about right after all. I certainly wouldn’t go lower. I don’t have as much patience as I once did, or time, to handle more returns and more calls to customer service. But I’m happy I’m not spending more too. A penny saved, and all.

This weekend we purchased a new set of patio chairs. I spent a bit more than I typically do. Here’s hoping I don’t regret it.


patiochairs

I don’t regret it!

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