Real Value vs. Perceived Value

I have a friend who thinks the more expensive an item is, the better it must be. Her perceived value is forged by advertisers, marketers, and in part, it has to do with the way she was raised. She is the type who will shop at the grocery store and pick the most expensive jar of peanut butter because she figures it must be the best. She researches nothing and does the same thing with clothes, insurance companies, cars, shoes, and electronics. She is what makes the consumerism train roar ahead at full speed. Marketers love her because she can be easily swayed and her mind can be molded like a fresh piece of clay. If she just did a little research before making buying decisions she would save SO much money. I have been telling her this for years with no effect. I just can’t convince her to change her ways.

Example: The $500 Coach Handbag

Some people perceive that a Coach handbag bought for $500 is a better value than a $25 handbag bought at Target. Their perception is based on the handbag being a status symbol they can show off to their friends as well as to strangers that pass them by in the shopping mall. Some consumers are willing to pay a premium for items that carry the perception that they are the “best” money can buy. My take is that they both carry my stuff, and neither have holes in the bottom. Why would I want to buy more than what is reasonably needed? This concept is lost on so many people who are struggling with debt and wondering why they can never get ahead. Look at your lifestyle, you may not be to the extreme of the $500 handbag, but you probably pay $50-70 a month on cable, buy $3.50 cups of coffee, or spend $75 a month for cell phone services.

I especially find the premium for concert tickets an interesting example. Growing up, I can’t remember how many times I sat in the Bob Uecker nose-bleed section, looking down on the people in the first few rows, and said to myself, “Man, I wish I could afford those seats”. My perception was that those seats would increase my happiness. Today, I am content with the seats I have in life. I have realized that wishing I was in somebody else’s seat only detracts from my current happiness. Not worth it! Live within your means, find the real value in “stuff”, and sleep well at night.

17 thoughts on “Real Value vs. Perceived Value”

  1. Good article, I am not in USA, so do not know a coach bag from a plastic bag, but the comments are great as well.

    I do have one thing to add though. If you really know your quality brands and quality models (some brands have great quality mixed with poor quality depending on the model) then you are in a great position to buy second hand.

    I recently had my HiFi system stolen in a burglary, and I went straight to online auctions and charity stores. I purchased a new system that will never break down, or need to be replaced for the rest of my lifetime. I paid less than the value of the equipment stolen, and I traded up to some very impressive units.

    I saved two thirds of the new price. I also paid less overall than the cost of an average Japanese brand.

    I also challenge any burglar to steal the system now. It weighs over 100lb, and the brands are so rare that they will be hard to fence, but easy for the police to identify. I have been burgled before and know that you can often get your items back if they are very unusual.

  2. Excellent point made in your post!

    I do agree with the other posters who are saying that a well made item is more frugal than a cheaper item when it is going to last tons longer. But your point seems to be about labels and what makes you look good or what has you keeping up with the Joneses….

  3. Holly, I totally agree. I have a Coach bag that I paid $200 for about 15 years ago at the Coach outlet (plain black with no C’s on it, classic styling) and I’ve never had it break. Last year, I bought a $25 trendy Target purse and after a month it started to wear through and looked so cheap. I had to toss it at the end of one season it was so ratty. I couldn’t care less that it’s Coach or Gucci or KMart, but I knew it was good quality, it would last and spending a little more upfront paid off in the long run! I’m pretty thrifty and not logo conscious, but I think there are some things that are worth spending a little more money on: a good classic pair of loafers or quality jeans that fit. Of course I find the best deals on them ;)

  4. Very rarely is more expensive better. But marketers have made our perceptions into reality . . .

    I search for quality and value. How do I secure these traits? I ask myself some questions:

    Is it well made?
    Is it built to last?
    Is it a good exchange for my money?
    Is it a time saver?
    Is it a money saver?
    Is it a money maker?
    Is it warrantied?
    Is it guaranteed?
    What else am I getting?

    For more ideas on quality and value:

  5. I picked up a $10 handbag at Charlotte Russe four years ago. It was the first purse I really owned or carried (I had a backpack in high school and college, so a purse was sort of useless), and I carried that thing everyday for four full years. I was a flight attendant and dragged that thing all over the country. It was in and out of overhead bins multiple times a day. It went with me to parties, to clubs, to concerts, to dance halls. And you know what? It held out just fine.

    Arguing that your expensive purse saves you in the long run is kind of silly. An item doesn’t have to be expensive to be well-made, and if you take care of the things you own (regardless of initial cost) they can hold up for a very long time. I have this argument with my boyfriend all the time, who thinks that more money means better quality. When I show him shoes I’ve owned for 8 years that I got for $20 or sweaters and dresses that I bought on sale when I was in high school that I still wear, he’s always shocked that I made my money go so far on what he considers “inferior” items. And while he talks big talk about how long expensive items will last, he tends to cycle through new things quickly (particularly with electronics) and so he never gets the long-term use he claims he will get out of them.

    I would argue that an expensive one-time buy that you use for a long time is probably money well-spent, even if I think you could probably have gotten something just as good for far less money. However, most people don’t do that. They justify the expense with the long-term argument, but for the most part, the money is thrown at an item that is being purchased for status, not quality.

  6. I have to say that I agree you have to do your research before you buy anything especially something as expensive as a Coach bag. I have 3 and a wallet and I LOVE them! I also did my research and got them at 25% off and on base so they were tax free and I paid cash for them. We all know they will last forever and I smile every time I pick one up. I know that we are all supposed to be practable and be good stewards of our money but sometimes you just have to splurge and get something that you love every now and then otherwise life becomes one big case of depervation and we all know how that will turn out…with a $6,000 credit card bill!

    So I say be practicle and know that most of the time less is more but also save up and have a little fun every now and then!

  7. Whether we want to admit it or not, at some point, we’ve all had the need to buy stuff we couldn’t afford to impress people we don’t know…

    Maybe it’s simply a maturity thing but it seems like some people come to their senses and grow up from that and others never get it.

  8. While I agree with the others above me that some things are worth the investment many people are still paying more than needed for the branding.
    Continuing with the purse example: there are many quality handbag companies that produce excellent leather purses with lifetime warranties for about 1/4-1/3 of the price of Coach.
    If you truly want a Coach bag and will always use it then it may be worth the difference- I have two quality Italian leather purses (made in Canada) one black, one brown, that cost me $125 each and I expect to last me a lifetime.
    I guess my point is that I most definitely agree about buying quality but not about buying labels.

  9. “My perception was that those seats would increase my happiness. Today, I am content with the seats I have in life. I have realized that wishing I was in somebody else’s seat only detracts from my current happiness. Not worth it! Live within your means, find the real value in “stuff”, and sleep well at night”—————–
    Well-chosen words. Obviously, I am not into handbags and such, but trying to keep up with the Jones’s does not cut it nowadays. I believe in common $cents$ when purchasing most things. Liking oneself and sleeping well at night is truly important.

  10. I am fine with spending money on something that I want but I will save for it.
    With the example above, I have a Lonagberger purse. I saved for it bacause it was what I wanted. But I save money on other things. We don’t use paper towles, namkins and real plates. That saves money on our food bill. I make my own bread because I don’t wnat to spend $3 on a loaf I can make for about $1

    So if it is something I have looked at and want I can save for it instead of putting it on my credit card I am fine with it. And I better last for a LONG time!

  11. Great comments! I had no idea the Coach exmaple would spark such comments. As a guy, it always blew me away when I saw the price of those things. I have had my $15 velcro wallet for 10 years. But if the Coach bag lasts forever I can see how it is a true investment. Although I would buy it at an Outlet like Sarah. :-)

  12. My Mom used to say “Cheap is Expensive” and in the case of the $25 purse, I think she was right. I, too, have a Coach bag, a classic black one that will never look dated, that I have used for 20+ years. It’s good that I like it because the darn thing will NEVER wear out and if it does, Coach will fix it for free. For 99% of things, I don’t care at all about labels, and will never pay just for the “name”. But some things are such good quality that it makes sense to pay more for them. I carry my life with me in that bag and want it to hold up to the stress I put it through!

    Now the concert thing? I couldn’t agree more! Your ears hear just as well in the cheap seats as they do in the $250 floor seats!

  13. I agree with both Holly and Kirsten.

    While I can’t see spending hundreds of dollars to have the latest Coach bag. Some people buy a new one every time the new collection comes out. I do think that Coach bags are very well made and are a true investment. I bought one at an outlet and have been carrying it for a little over 3 years and it looks brand new. I have never $25 bag last that long.

    I’m all for saving money and buying the most inexpensive item but sometimes it does “pay” to spend a little more.

  14. I agree with Holly. Sometimes is does pay to spend more if it is really something you’re going to have for a long time. This makes me think of my sweaters. I love sweaters. I have some that purchased from less expensive stores (Old Navy, Target) that I spent $25 on and they started to pill and fall apart after one season. I also have sweaters that I bought from more expensive stores for $90, and I’m still wearing them after 10 years. I think the more expensive sweaters were the better bargain in the long run.

  15. While the less expensive bag may seem like a better deal in the short run, I have a Coach purse that I bought for two hundred dollars many, many years ago. (It’s a classic brown leather bag; no C’s all over it; no in-now/out-later styling.) It is my only purse and I use it year round. It has broken twice (once the strap broke, the other time the seam on the bottom started to go) and both times it was fixed for free by Coach. So I paid up front (and with cash that I had saved for its purchase), but I will never have to buy another purse again. Even at $25, buying a new purse every 6-12 months when your old one wears out will add up to more than I paid in just a few years.

    Now, if you were talking about buying a new purse (Target or Coach) to change with the seasons or your outfit, I agree that the cheaper purse is the way to go. But if you’re looking to buy one purse that will last forever, Coach is a much better choice than Target.

  16. I wouldn’t know a Coach handbag if it jumped up and bit me, and I would guess there are a lot of other folks out there who wouldn’t recognize one, either. My point being, anyone who buys “the best money can buy” in order to impress friends and strangers may really be missing their mark.

  17. I think that your point about your friend who doesn’t do the research is the important thing. If she really studied and chose wisely, like many who commented here, then that would be one thing. But if she just buys whatever because someone else *says* it is the best, that’s just foolishness. I buy good quality shoes, because I expect them to last. I pick styles that are timeless and well made. But, I do my homework and buy them on sale, at outlets, or (my favorite) from local small business. On the other hand, I am also happy shopping at thrift stores. I get generic medications and buy whatever peanut butter is on sale and I have a coupon for. I think being frugal does occasionally mean paying more when you know you will get a good value from it, but also being happy with less when it isn’t needed.


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