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How do you determine if something is expensive?

Discussion in 'General Entrepreneur Discussion' started by Runum, Sep 30, 2007.

  1. Runum
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    Runum Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    OK guys and gals, I have a question. How do you determine if something is too expensive? My experience has been something(ex. a stereo) is too expensive only if I don't have the means to buy it. When I interview prospective tenants some will state that the rent rate is too expensive. The next prospective tenant thinks the rent is just right. Some may think it's too low. Is something too expensive only when you can't afford it or is "too expensive" is a relative term?

    My question comes up due to wants. As I am making money with my investments it gives me a comfortable feeling and suddenly things aren't so expensive anymore. I could wind up spending all of my profits and more. So, second question, how do you control it?

    Thanks to all.:cheers:

    Greg
     
  2. Satpoint
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    Satpoint PARKED

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    Expensive = if you can find the same product/home/ect. for less from another seller.
     
  3. Rawr
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    Rawr Gold Contributor Speedway Pass

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    An interesting take from this guy:

    I too tend to look at value when I buy something. Are those shoes at $150 much more comfortable than those at $40? Do they not wear out? By looking at things as they are not as you want them to be you can be more practical in your decisions. Ex. - I need new shoes, these look good but I want to wear them to the gym anyway, and they are 4x the price of the other ones that are just as good.

    Now when it comes to things you REALLY want to buy - this is where I can get confused. For example - I will eventually buy a lambo, and there is very little common sense as to why that car is better than a car that is only 1/3 the price yet just as fast or loud. Now the value for me may be pumped up because of the feelings I experience from driving that particular car, the bling factor and the exclusivity, plus resale value.

    So how do you determine if something is expensive? You look if value derived is less than the price you pay. And don't mix in feelings - look a month or two down the road and try to think of how you will feel about the item then.

    Hope that helps
     
  4. nomadjanet
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    nomadjanet Contributor

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    Less stuff = more freedom. You can pick up and go if you have less stuff to worry about. Now if I can only convice my DH of this. :)
    Janet
     
  5. yveskleinsky
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    yveskleinsky Bronze Contributor Speedway Pass

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    :confused:I give up. I cannot figure out for the life of me what DH stands for! Domestic husband? Darling husband? Daring hairdresser? Dancing hamster? Clue me in if you would!

    ...Totally right on about price, value and the defenition of expensive. I think that all 3 concepts are relative and can shrink or expand in proportion to one's financial intelligence, financial creativity and mental horizons. ...If someone thinks something is unobtainable it is. If someone thinks something has value, it does. If someone thinks the price is reasonable, it is. However, if a shift in thinking can occur to where a person looks at something they want and they think, "How can I" instead of shutting down mentally and thinking it's too expensive- well, then their whole world expands...and can never shrink back to original size. Mind blowing really.
     
  6. nomadjanet
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    nomadjanet Contributor

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    DH is Dear Husband trying to appreciate him and his differences. I don't know why but half my post was left off. I also agree with the fact that what is expensive is relative to the income & the appearance of value. When I was younger, I thought how can I afford stuff & continued to find ways. As I get older I am not looking for stuff, I am looking for time & experiences. Taking off a few weeks in Kauai is worth more to me than a fancy car, now that might be heresy to the Lambo guys but that is me.
    Janet
     
  7. jimculler
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    jimculler New Contributor

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    Something is too expensive if it does not fit into my discretionary budget, and wont make me any money in the future.
     
  8. kimberland
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    kimberland Bronze Contributor

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    Or D*** Husband. LOL. Pending on the post.

    Expensive is subjective.
    It is based on the perception of value
    and everyone has a different value system.
    What is important to me
    may not be important to you.

    What is key is considering all the factors,
    not simply price,
    when discussing expensive vs inexpensive.

    BTW...
    when selling, never, ever mention the price until the very end
    (or not at all).
    Lay out the other key factors first.
    Most people buy on emotion, not analytics.

    : )
     
  9. Runum
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    Runum Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    bump for new members with new perspectives.:cheers:
     
  10. madison
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    madison New Contributor Read Millionaire Fastlane

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    Something is expensive if you can buy that item with the same or similar quality for a lower price.

    Paying a lower price can be more expensive than paying a higher price for an item. e.g. if you buy a $50 pair of shoes that wears out within a year (i.e. lower quality), you would have been better off paying $100 for a pair of shoes that lasts 3 years (higher quality).

    If the item you are purchasing is not a necessity, then it could also be classed as expensive - it is costing you the amount than your investments would have returned if you had invested the money instead of spending it.
     
  11. rocksolid
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    rocksolid Bronze Contributor

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    How do you know if you payed too much?? What is a good price for something. My rule of thumb is simple. If you are happy paying the amount you payed for an item then it was a good price.
     
  12. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    How many hours will it take to pay?

    If you make $20/hour and buy something for $100 -- the cost is 5 hours of your life.

    If you make $200/hour and buy something for $100 -- the cost is 30 minutes.

    If you make $200/hour and buy a $100,000 car, your cost is 500 hours.

    If you make $20/hour and buy a $50,000 car, your cost is 2,500 hours.

    Expensive is valued at how much time your life loses to pay for it.
     
  13. Runum
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    Runum Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    That's exactly how I changed my spending habits. This little $500 doohicky will make me have to work 25 more hours(over 3 more days) at a job I really don't like. Do I really want that doohicky that much?
     
  14. mtnman
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    mtnman Bronze Contributor FASTLANE INSIDER Speedway Pass

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    That's a very interesting way of looking at it... really cuts through the bologna.
     
  15. Russ H
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    Russ H Gold Contributor Read Millionaire Fastlane Speedway Pass

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    I totally agree-- looking at things this way totally changed my consumption habits.

    No more buying $5-10 magazines, when I spend only 10 minutes looking at them. Or $20-40 books.

    I'd go to the library and read mags to my heart's content when I felt the urge (even bought a house half a block from the library, at one point).

    How about eating? Spending less than $10 on lunch or dinner when you make $150 an hour is almost too small to measure.

    Yes, multiply $10 x 2 x 365 days and you get $7,300.

    But multiply 365 x 10 x 150, and you get $525,000 (which is pretty close to my avg income for the past 12+ years, before expenses, of course!).

    Ummmm . . . dare I point out this is a core point in the book Your Money or Your Life? :smx3:

    -Russ H.
     
  16. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    What really cuts through the bologna is that your time is fixed and finite. Your pool of time from birth to death is fixed. It never goes up. Money, however, is virtually infinite. You can always make more. So if something costs $xxx, it really steals life from your fixed pool of time.... that is, unless, you have a system that makes you money as opposed to you making money.:smxB:
     
  17. RealOG
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    RealOG Bronze Contributor Speedway Pass

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    The dollar/hour method is a consumer way of looking at things. What really matters is value.

    Case in point, the Slap-Chop:
    Two people who both make $10/hour are looking at the Slap-Chop to help make coleslaw in 1/10th the time it normally takes. One really likes coleslaw and makes it twice a week, the other makes coleslaw every day at her job (she's a chef).

    Who is likely to buy the product for $10? $50? $500?

    Value is relative and can be derived in two forms:
    1. Value gained in having something
    2. Value lost in not having something

    If you are selling something, figuring out how your customer values your product is key. Want to sell for more? Educate them on how to value it through marketing.
     
    yveskleinsky likes this.
  18. Runum
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    Runum Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    I just came to the realization that my value of something is only based on being an employee at a job or self employed as an S. I would assume a different value system would be in place for an I or a B. Interesting, I'm going to have to adjust my value system measurement. Thanks for the wake up.:cheers:

    I am also seeing how relative the value of something is and also how difficult it is to see the value of something through someone else's eyes.
     
  19. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    It's a core point in mine as well except I don't devote 10 Chapters to it .... I have time as 1 of the 4 Fastlane "cardinal virtues". Time is more valuable than money based on simple supply/demand -- time is finite. Money is not. (Of course, this is all defined within the limits of mortality ... if we lived forever, it would be opposite: Time is infinite and money is finite.)

    Philosophical! :chatter:
     
  20. Russ H
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    Russ H Gold Contributor Read Millionaire Fastlane Speedway Pass

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    MJ-

    As a big bonus, I'm sure your book will be more interesting (and less preachy) than YMOYL! :banana:

    (looking forward to reading it when it's ready) :)

    -Russ H.
     
  21. EasyMoney_in_NC
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    EasyMoney_in_NC Contributor

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    I always value "expensive" in the way that I perceive the item's value to me. Just because it costs a lot of money, doesn't necessarily mean its "expensive". If the intrinsic value to you is high, then the value warrants the expense. Having said that, I've always tried to be one who only bought what I could pay for and in that it causes a somewhat realistic sense of value vs. the expense. Cheapest isn't always best nor is the most expensive.....but that starts getting into a question of quality and thats another issue for another thread :)
     

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