When should you spend top dollar to buy brand name goods?
Personal finance writers everywhere espouse a frugality mindset, often supporting the notion that brand names are a waste of money when you can buy similar No Name goods for a fraction of the cost. And the examples used so often leave little doubt.
Who needs a $4,000 purse, when a $80 purse is just as functional? Or a $10,000 watch when a $40 Timex does the same thing?
While the argument in favor of the cheaper option is compelling, there is far more at work than the simple dollars and cents.
When should you buy Brand Name?
Buying quality goods isn’t just a luxury, there are some very good reasons why someone would choose to spend the extra money.
The Product is Part of Your Identity
How much is your identity worth?
The answer to that is there is no price you wouldn’t pay. It is simply who you are.
We can see examples of this every day, just by taking a look in your front pocket. Do you have an iPhone? Do you know someone who does?
From a technology standpoint, iPhone’s are an inferior product. Hands down, different android phones perform better than the iPhone across any single metric. Battery life, camera quality, durability, ease of use. An android phone is certainly superior in whichever criteria you choose.
Why then do so many people have an iPhone? Because it says something about who they are. Their identity is synonymous with the ideals and values that the product embodies. People love their iPhone’s because it is a reflection of who they are, and the phone is simply a tangible way of showing that identity to the world.
The same case can be made by Harley Davidson Motorcycles. People will pay a premium for a Harley because they feel that the product symbolizes their own values of freedom and independence.
When the product is a way of showing the world who you are, the question becomes more than simply what the price tag is for a set of features.
Higher Quality is Valuable
Another reason to buy a premium product is the long term cost of ownership.
During a camping trip this summer, some friends made the comment that the coolers we used are quite expensive. Anyone familiar with Yeti products would agree. The coolers that we have for camping and outdoor adventures weren’t cheap.
But, as a testament to the quality of the cooler, we haven’t yet had food spoil because it wasn’t kept cool enough. For our outdoor adventures, having a product that works well isn’t just a nice to have, it’s essential.
But aside from peace of mind, the difference in quality can actually lower the long-term cost of ownership. A quality product can be with you for years, even decades after a cheaper alternative has needed to be replaced.
One such example is in footwear. A good pair of leather boots, properly maintained, can last a decade or more. With semi-regular treatment of the leather, and the occasional re-sole, those favourite pair of boots will outlast a dozen pairs of the cheaper options. Ultimately, due to the longer lifespan of a quality product, the total cost of ownership is less.
When to Buy Brand Name - A Practical Approach
Thinking about higher quality, or even the personal identity makes the decision to buy top of the line goods easier. But it is too easy to fall into the mindset that you should always buy top quality. Sometimes the no name option is the better choice than another Gucci wallet.
In true Business Minded fashion, as we strive to unlock the secrets of success, we needed a more formulaic way of making these choices. These decisions can’t simply be at the whim of “Does it match my identity today?” or, “Do I need top quality?”
The solution to this problem of No Name vs Brand Name comes from a piece of wisdom I heard a few years ago.
When you are buying anything for the first time, buy the cheapest product you can. If that product wears out or breaks while you’re using it, replace it with the best quality option that you can reasonably afford.
Why this works?
This guide to purchasing helps take the guesswork out of the game. When you’re buying a product for the first time, you don’t know what to look for, or even if you’re going to continue using the products.
When I first moved into our condo with my girlfriend, I bought a mixed pack of 32 cooking utensils. By no means were these top quality, but I had enough different tools to cook with. In short order, one of the spatulas that I used every morning broke. By this point, I knew exactly what I liked about the spatula, and what was valuable to me. Now, when I went to make the replacement purchase, I knew exactly what to look for, and am overjoyed with our high-quality replacement.
What about the rest of that mixed pack of cooking utensils? Well some of them I use regularly, and know what to look for if they ever need to be replaced. And the rest? I haven’t ever picked them up. Buying top quality from Day 1 would have been a complete waste on those items that have never seen the kitchen lights.
Deciding what to buy shouldn’t feel like a chore. This simple formula of buying cheap, and replacing with quality ensures that you only spend your hard earned dollars on things that you’re actually going to use.