In theory, the price of a thing is a function of its labor cost and the capital required to produce it, with a markup for profit. Sellers usually seek to maximize this profit, but competition drives it down. If the expense of labor and capital cannot be covered, the company goes out of business or goes into debt to remain in business.
Things that require more labor cost more, as a function of the expense needed to create them. Generally speaking, the more labor that goes into something, the greater its quality, and this is why expense is correlated with quality. Better jackets are often more expensive because they require better materials or additional labor.
But this isn’t always true. Humans are not particularly rational, and the assumption that a higher price tag means a higher quality of product is often mistaken. Humans tend to maximize for a particular trait, the most common of which is quality, but it can also be preference (paying extra for a specific color), prestige (fewer people can afford it), rarity (fewer people have it), or convenience (particular features, or simply being easier to buy). What’s important to sellers is not necessarily the real value of a thing but it’s perceived value which determines how much consumers will spend for it.
This is why price is not necessarily related to quality: some companies charge exorbitant prices because they have done their research and discovered that people will buy their products anyway. Sometimes there is a lack of competition, which is why companies try to be unique, to monopolize on their uniqueness. Sometimes there is a lack of demand. Not many people are out buying metal detectors, so companies that produce metal detectors have to charge higher prices in order to stay in business, even if the technology pales in comparison to, say, your average smart phone.
Getting snookered happens when you pay a high price for a product of low quality: the company spent very little producing the item, but charged a high price, to maximize profits, and the quality suffered. When you aren’t savvy enough to realize you overpaid, the company benefits, but you do not.
However, people are also notorious cheap-asses and expect everything to cost as little as possible, unless they are buying luxury items. Printers are a good example of this. We’ve probably all heard about how printer companies lose money selling consumer-grade printers but make up for this loss on the sale of ink. While this might be true, it certainly is true that printers are full of moving parts, unlike cell phones and computers, which typically run purely on electricity. These moving parts are difficult to assemble in a factory, so if you expect to buy a $60 printer that works flawlessly and sips ink, you are probably not thinking of the bigger picture. The more expensive the printer, generally, the better its quality, but since nobody wants to pay $1,000 for a printer, consumer-grade printers typically suck. Sure, these companies are kind of evil for charging so much for ink cartridges that last 20 pages, but what if they have to do this to stay in business? What if it’s not so much the evil-ness of companies as it is human nature, that people are simply willing to pay for a cheap printer and overpay for ink? What if a printer company had tried to do the right thing and charge the real price for a quality printer, but then never made any sales because nobody wanted to pay that much, and only had two options: go out of business, or under-price the printer while over-pricing the ink? After JC Penny tried to do away with those ridiculous “$0.95” price endings, switched to whole dollars, and did away with fake sales, they almost went bankrupt. It’s easy to blame companies for shady psychological tricks (I certainly blame them!), but what if human nature is so illogical that you have to use these shady tricks in order to survive the competition and stay in business?
I’m on the lookout for a new printer. I’ve been searching for a compact one that takes up less space. My old one is 9 years old and is still a decent printer despite it’s bulk, so I’m not sure I should “upgrade” yet, but I’ve been looking at some expensive models and even those have a reputation for using up ink fast. It seems that only once you get into business-grade printers designed for heavy use that the ink becomes more economical. But there are quite a few companies in this business, so I would imagine the competition is pretty fierce. It makes me wonder if good consumer-grade printers are just darn difficult to manufacture cheaply. People will pay $700 for a computer, $1,000 for a cell phone, but nobody wants to spend more than $100 on a printer. Curious, to say the least! If you’re complaining about your $80 printer sucking, you may need to stop and ask yourself what exactly you were expecting from an $80 printer. What’s amazing, though, is that it will often still work!
I don’t know. I don’t want to pay $500 for a printer that still kind of sucks, but didn’t I also pay $600 for a high-quality GPS that I rarely use? What is it about printers that we simply hate paying for?
And when you are buying something expensive, how much you intend to use it should at least cross your mind. If I only print 20 pages each year, a $500 printer comes out to $25 per page! Of course, the idea is that it lasts much longer. However, there is also a convenience factor here, in that I’m usually printing personal tax or ID documents that I don’t trust to a print shop (the most economical choice). I’m also maximizing for space by trying to find a highly compact printer, so there are more considerations than simply cost per page, but since my current printer still works (well enough), am I really getting any value from a “high quality” printer? Is paying $20 per year in ink the worst thing in the world?
Of course, over-thinking something can be its own form of ‘stupid’, and I think I suffer from this quite a bit. But make no mistake, assessing the quality of things these days is extremely difficult. You can lose your mind researching all of the options out there!
But herein lies a greater issue seeking out quality products: how often are you coming out ahead? If everything you own is quality, who’s to say whether you needed that level of quality? There was a cheap, post-board TV cart in my family for decades. When I finally took it to the thrift store as a donation, it started falling apart on the dock! That cheap thing lasted almost 3 decades, if you can believe it. Pretty silly to think we needed, say, some heirloom-quality Mahogany entertainment center! Important to note, there, that furniture goes out of style rather quickly, so be careful what style of quality you’re investing in! Upgrading can also be fun, so if you enjoy the process too much, be careful jumping from one quality thing to the next, as quality tends to pay out over the long run and not the short run. And if it doesn’t pay out over the long-run, it probably wasn’t quality to being with 😉