We’ve all heard the saying, “you get what you pay for.”
While it is a sensible mantra in some situations, when it comes to choosing an aspirin or a type of paper towel, sometimes the glossy name is nothing more than a good way to spend more money for no added benefit.
So how do you know when to pay for quality and when to just pick the cheapest option?
Let’s break it down.
Commodity goods are mass-produced [in a way] to arrive at a finished good that is both basic and homogeneous.
Some examples of this are hardware fasteners — such as nails, screws, and bolts — and foods like baking soda, granulated sugar, table salt, and medium grain white rice.
I’ve found that especially with regard to food, people get hung up on certain brands. But know that chefs themselves are more likely to pick the store brand, particularly when it comes to buying the sweet stuff. (Bronnenberg, Dubé, Gentzkow, and Shapiro, p. 46)
Highly regulated stuff
When it comes to over-the-counter medication and most gasoline, the government or some other regulatory body makes sure that products carrying a certain name meet a minimum requirement for ingredients, safety, and effectiveness.
It’s easy to understand why you might lean toward the more expensive option when looking at medication. After all, our bodies are complex machines and we really don’t understand all the science that goes into making drugs. Luckily, doctors understand it a bit better than we do, and for most categories, they go for generics when they buy over-the-counter medication for themselves (Ibid, p. 43)
Of course, this discounts the placebo effect that some people may experience by simply believing their name brand drugs carry special powers. Scientists have actually shown that high-priced placebos have a greater effect than less expensive placebos. (Ariely, Waber, Shiv, Carmon)
In other words, expensive fake medicine works better than cheap fake medicine.
Still, when I’m feeling sick and have to make a trip to the drug store, knowing that I saved a few dollars to get the same ingredients as the expensive stuff makes me feel better already.
Things that are pretty hard to mess up that I don’t care too much about.
I wish I had a better name for this category, but I think you get the idea. There are a lot of things that we need to buy and the quality isn’t terribly important.
For me, this category includes notebook paper, cotton socks, and paper towels (note that it does not include toilet paper). Of course, for all these things, I’m assuming a reasonable difference in quality, but at the end of the day, as long as they serve their basic function — to write, wear, or clean — it doesn’t really matter.
Bottled water gets its own category. I understand why people prefer certain brands over others, but really — do you need bottled water at all? If you’re staying well-hydrated, the extra few bucks you’ll pay up for a reusable bottle and a filter (if you need it) will outlast those 24-packs, and it’ll help the environment.