Quality spending

November 24, 2020

Most of the quality found in products and experiences tends to fall within the first order of magnitude in price.

What do I mean by "the first order of magnitude in price"? Consider the lowest price you're willing to pay for a product or service you typically consume and then multiply it by 10. This is the sweet spot.

Let's explore some examples:

Compare a car worth $2,000 USD with one valued at $20,000. What are the key differences between these two items? The cheaper model might lack a full set of airbags, ABS brakes, and fuel efficiency, all of which the more expensive car has. What distinguishes a $20,000 car from a $200,000 one? The less costly vehicle may have fewer horsepower, lack leather seats, or no self-driving. How necessary are these additional benefits?

Consider meals at different price ranges: $5, $50, and $500. With the mid-range option, you'll receive a delicious meal made from high-quality ingredients. You can be confident that the food preparation adheres to sanitary guidelines, reducing the risk of food poisoning. So, what does the $500 meal offer? It might include an exotic ingredient, but many of us lack the palate to discern the difference when compared to the middle option.

Let's compare vacations priced at $300, $3,000, and $30,000. The mid-range option will provide a comfortable two-week stay in many places around the world. While you may not be flying first class or shopping designer clothes upon arrival, you will stay in a clean and safe place, dine out in good restaurants, and have access to nearly all experiences the vacation has to offer.

The first order of magnitude in price will deliver almost all the benefits for a product or service. So, stop chasing products and services in the second order of magnitude. Stop comparing your life with those who live that way. I'd bet they're just as happy or unhappy as we are in the middle.

Feeling safe and owning a quality product fulfills 99% of our mental needs. It doesn't matter whether you have one of three limited-edition watches or own a gold-plated car. The thrill of acquiring luxury items quickly fades.