Quality First, Price Second

In the business of buying and selling, there's arbitrage on all levels. Be it in the price, quality or value. It is Warren Buffett that's attributed with the saying that price is what you pay, value is what you get.

The statement is a distinction that aims at separating the intrinsic value of a thing from its constant price fluctuations. Because of the volatility we sometimes overpay or underpay depending on market conditions. Value too isn't fixed, it changes with time and location.

However, this post explores the trade-offs between quality and price on the background of value when making a purchase.

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The Importance Of Quality

Quality can be defined as the level of excellence or superiority of a product or service. The most notable factors that determine the value are durability or performance, reliability, features and perhaps, aesthetics. Since looks can be deceiving, I don't see aesthetics as a leading indicator of value.

The Importance of quality basically hinges on the factors mentioned above. It is what gives products that have it a longer lifespan, reducing the need for constant replacement or repairs.

Because when we buy something that's not quality, we incur additional costs for its upkeep. Which can quickly amount to the money spent on buying the item. Or sometimes surpasses it.

Price As A Leading Indicator Of Quality

In many cases, price is usually how we get a glimpse on the quality of an item. Mostly, higher prices means a higher quality in our heads. Premium brands are very good at commanding higher prices due to how well they push the narrative on the perceived superior quality of their products.

The thing is not all high priced products are quality products just like not everything that glitters is gold. If we had to rely solely on price to determine quality then we will be overpaying many many times. Looking at the reputation of the company can also help. It's almost a no brainer that Apple products are quality products.

Trade-Offs And Preferences

Here's the trade-off that we often experience when making a purchase. Do we opt for a higher quality product or a lower priced product? A higher quality product could entail a higher upfront cost but this may result in long-term savings through avoiding replacements or repairs.

A lower priced product on the other hand, may save money initially but quality is sacrificed and there's the potential of more expenses in the future for upkeep.

It might sound as simple as picking the higher quality. And save ourself from the headaches that come with a lower priced product. But it is not that simple in reality. Apart from individual preferences, there are quiet a number of factors in play.

One of them is time sensitivity, meaning how long will we be needing the item. We may not need to buy the expensive higher quality product if we will be using it for a short time. Speaking of expensive, what if it is not affordable to us due to it being beyond our budget ?

Then there's product category and risk tolerance. Some people are not willing on spending big on a product category like electronics or clothing to purchase a high quality product.

In Closing

Although in the title I put quality first and made the above argument in favor of price, the trade-off between quality and price is subjective and can vary depending on individual circumstances and preferences.

It's recommended to consider our unique situation and priorities when making financial decisions related to quality and price.

However, It's always important to remember that value is what we get ultimately. Both price and quality are arbitrary measures of it.


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