Came across this fascinating article from Joel Spolsky on how to price products. No, really, despite the use of graphs, it’s really interesting. He talks about software, but really it applies to anything. He makes some great points about companies getting people to pay what they’re willing to pay for a product, through market segmentation: concessions for the oldsters, cheap movie tickets during hours when employed people are at work, grocery discount coupons that most people with money don’t bother with.
One he doesn’t really talk about is early adopters vs late adopters. The brand new sparkly product vs last year’s model. Video games are a good example: I’m not a hardcore gamer and I can’t bring myself to pay more than A$50 for an XBox game. I’d rather wait until it drops. Hell, I haven’t had the time to finish Halo yet, so I won’t be getting Halo2 for a while.
Personally, I won’t run all over town looking for a particular bargain, unless on the day I’m feeling particularly stingy or am aiming to save a phenomenal amount of money. I don’t have the time. For instance, I recently bought a new hard drive for one of my computers. I bought it at Dick Smith because it’s just down the road (incorporated a healthy walk into it) and because I knew they had what I wanted in stock. I could probably have saved $20 or more by shopping around, but that involved time I didn’t have (or at least, didn’t want to spend). Also I suspect the bright appearance and perception of no problems with vanishing shops or argumentative return policies give me warm and fuzzy consumer confidence feelings.
When I get my car serviced, it goes to a dealer. Again, it could be done cheaper elsewhere, but the dealer almost always have all the parts required in stock, so I’m rarely without it for more than a day. Given the state of the PT system and my travel needs, it’s often inconvenient to be without my car, and that’s an inconvenience I’m prepared to pay a premium to avoid. Indeed, some people with more time than money don’t do preventative maintenance on their cars, simply fixing things when they break down. I prefer to avoid breakdowns, since I’m invariably in a hurry.
This is not to say I won’t leap at a bargain when I see it, or that for whatever reason I sometimes refuse to buy something, on the basis that I know or think I can get it cheaper somewhere else. I dare say if I were to cruise around the web sites and find my favourite Doctor Who story on DVD for $10 cheaper than anywhere else from a reputable retailer, I’d snap it up. I also frequent places like K-Mart and Big W when I’m buying kiddy clothes.
Obviously the equation is different according to how much time you have, how much money you have, and how much you can save. For now, I’m short of time. When somebody builds some kind of device that squeezes about 30 hours into the day, maybe for me that equation will change.
4 replies on “Time vs money”
Years ago I was looking for a new tv and saw a reasonably priced one at K Mart. Instead of buying it, I thought I should shop around. After all, that’s what people do. Then a friend reminded me that my time was just as valuable as a few dollars so I went back and got it without looking elsewhere.
I think some people get real pleasure out of finding the cheapest price possible – it’s their hobby. But for most of us it’s worth a few bucks to avoid a weekend wasted in the shops.
Oh and lets not forget the cost of petrol/phone calls trying to track down a cheaper price.
I agree and think that the personal time factor is forgotten or not considered sometimes by bargain hunters. I’ve now reached a point of being able to break out of the price scrutinising ways that my mother taught me, and be able to factor the cost of my own time and energy into a purchase. For example, maybe I could have got the equivalent of the car I currently drive at a cheaper price (it’s not like a Corolla is hard to come by), and it might have been in the same great condition … but it would have taken a lot more of my time to find the same for a few hundred dollars less. I did have arguments in my head at the dealership though, trying to justify why I didn’t need to spend weeks looking for a car, and why I could buy it on the first day that I had gone shopping! End result? A very reliable car that I have been driving for the past 18 months and which I love. Maybe I would have saved a couple of hundred dollars? But I would have expended a lot more energy, and used up a lot of Saturday sleep-ins in the process too.
I also often considered the petrol option too when my family would go to a different supermarket because ‘x’ was on special, saving 50c off the regular price of it at the supermarket we normally went too … It wasn’t quite that extreme, and trips generally aren’t made for one item at the supermarket that happens to be on special … But still, it is that element of it being a cost that we don’t necessarily factor into the savings that we might make. It’s also about being aware of where you shop too, like shopping at K-Mart & Target for kids clothes, rather than Pumpkin Patch or Osh Kosh B’Gosh … One needs to avoid buying blatantly overpriced things too!
I’ll jump to the defence of Pumpkin’ Patch here… PP are expensive IF you’re buying the latest season, but if you buy at the end of season sales, the prices are usually better than Target and sometimes as good as Big W or K Mart… however the quality is heap better. Before you jump at me about my quality statement let me explain. K Mart and Big W clothes are fine if they’re only to be worn by the one kid, but if you intend on passing them on the subsequent children, the clothes just don’t stand the beating the receive from the kids… from experience PP clothes do. In the long run, the PP clothes are actually cheaper*.
* if bought on sale and are worn by more than one child.
if you want to save even more time try the on-line shopping offered by the big supermarkets. i have just started …it took me about 1/2 an hour for me to organise my first order and i have now cut this down to 10 mins. every thing delivered within the 3 hr window i nominated for a tiny $4.95!!! i loathe grocery shopping and this feels as though all my xmas’s have come at once!!! a huuuuuuuuuge time-saver