When Less is More: The Importance of Perceived Value

The things we buy have an absolute value — the price we pay for them — but they also possess relative perceived values. Not everything with the same price holds the same value to me. An $80 pair of work boots might be worth much more to me than an $80 sweater or an $80 meal in a restaurant.

And I can often (not always) derive more value from something cheap than from a more expensive equivalent. Our discussion about wine last week is a perfect example: a good $8 bottle of wine is more valuable to me than an excellent $80 bottle of wine. It's difficult for me to detect a $72 difference between two wines. I get good value for that first $8, but the excess is an exercise in diminishing returns. (Plus, a lifestyle of good $8 bottles of wine is sustainable; a lifestyle of excellent $80 bottles is not.)

A night at the opera
Here's an extended example. I enjoy live theater. On occasion, I pay to see a play or — more often — a musical.

A couple of years ago, Kris and I went to the opera for the first time. We dressed up, drove downtown, met friends at an expensive restaurant, and then joined the crowd for a performance of Mozart's Don Giovanni. The night cost us over $200. We had an okay time.

Last year, we did the same thing. We dressed up, drove downtown, met friends at an expensive restaurant, and then joined the crowd for a performance of Mozart's Die Zauberflöte (The Magic Flute). Again we spent over $200. Again we had an okay time.

We also attend many amateur theatrical performances. One of Kris' co-workers is in a community theater, and we've been to see two of his shows. It's not high art. The plays are cheesy, but they're fun. The total cost is about $12 per event: $5 each for admission plus $2 for popcorn. But our main source of live theater has been small-town high school productions. These are always inexpensive and usually, well, interesting.


Sky Masterson finds value in gambling.

 

Surprisingly, I have just as much fun watching the neighbor kid as Sky Masterson in Guys and Dolls as I do watching a professional as Don Giovanni. Yes, it's entertaining to be part of the whole opera-going experience: fancy restaurant, fancy clothes, fancy music. But it's just as entertaining, and far cheaper, for me to eat dinner at Dairy Queen and then to catch a high school performance of You Can't Take it With You or Oklahoma!

I'm not saying that a sixteen-year-old singing “I Cain't Say No” is the same as watching a professional belt out the Queen of the Night's “Der Hölle Rache” aria — few things can compare. What I'm saying is that for the cost in time and money, I get far greater value from attending community theater and watching the neighbor girl sing “I Cain't Say No”. (Note: video is not of actual neighbor!)

Making the most of perceived value
This notion of perceived value goes to the heart of how we use our money. When we spend on things that give us little or no value, we're wasting our income, our work, our energy. When we buy out of habit, when we spend compulsively, we obtain little in return for our efforts.

Over the past two years, I've worked hard to use my money in ways that bring me the most value. To that end I try to:

  • Buy things I need — or truly want.
  • Buy things I will use.
  • Buy things that possess quality.
  • Buy things used or on discount.
  • Buy things I can afford.

Seeking value is a new way for me to shop. It's a conscious process. I'm more mindful of my choices. I buy less Stuff, but I'm happier with the purchases I do make. If I make decisions that reflect my values, and that bring me commensurate pleasure, my money has been put to good use.

I'm glad to have been to the opera twice, but we didn't return this year, and we don't have plans to go anytime soon. That $200 per trip? I'd rather save it for home repairs or a vacation or a new car. Or to go see 20 community theater performances. These will provide me with greater value for my dollar. (Your mileage may vary.)

More about...Psychology

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15 Minutes to Riches
15 Minutes to Riches
11 years ago

I enjoy theatrical performances more than most people. I really do. But I don’t think I would pay $200 to see ANY performance. 🙂

I can usually get good seats at my local opera house for much less than $100, but better still, my community arts center offers often high-quality shows for about $15 a pop.

It’s important to support the arts, but it’s not necessary to pay an arm and a leg to catch a good performance.

Trevor
Trevor
11 years ago

Yup.

Buying for value outweighs buying for want.

When you buy for value, it will genuinely be used and will become a great buy but when you buy for want, then you’re buying it because you “think” you need it. This way, you might not even use it and end up wasting it away only to be resold at a lower price.

Christy
Christy
11 years ago

May I suggest a possible third way in this scenario that has the potential of getting you the best of both worlds? A night at the opera doesn’t have to cost $200 (unless you purchase Orchestra seats and Renee Flemming is in town). You *could* choose to skip the fancy dinner and make the opera itself the event. You could also go to other (less pricey) professional theatrical shows (where you live has TONS of excellent theatre). I’m not eschewing the community or high schools shows. By all means, go see them if you derive enjoyment from that. But is… Read more »

Jeff@MySuperChargedLife
11 years ago

This is very insightful! I certainly agree. I couldn’t even fully enjoy an $80 bottle of wine because I’d be thinking too much about the cost. Of course, I can spend $1,000 on a new computer without batting an eye. Of course, my wife doesn’t fully see the perceived value in this!

Purchasing decisions are definitely influenced by one’s perceived value.

EscapeVelocity
EscapeVelocity
11 years ago

One thing that’s important to me in spending decisions is making choices that support the world being the way I want it to be–for instance, I buy my food locally because an economy where all food is trucked or shipped or flown in from long distances away scares me. Supporting local theater is more important to me than supporting flown-in opera productions, and they’re both more important to me than supporting Hollywood.

Sara at On Simplicity
Sara at On Simplicity
11 years ago

I’ve found that being completely honest with myself has helped me find value much more easily. Sometimes the hard truth is that I don’t have fine taste (the value for me in cheap champagne), and sometimes it’s that I’m more materialistic in key ways (the value of nice clothes). And this ties in perfectly with your piece on adult allowances: having a limit and a timeframe also helps me make much better decisions about value.

April
April
11 years ago

Maybe I’m a snob, but I couldn’t even compare the opera with a high school play. Not that I wouldn’t find the high school play enjoyable, but a good opera performance can move me to tears. I also used to sing in competitions, and my college roommate studied vocal performance and opera, not to mention I took some opera studies courses “for fun,” so with all that, I’m sure I’m biased. Two weeks ago, I saw Andrea Bocelli sing the part of Turiddu in Cavalleria Rusticana. You know how people have life lists of things they want to experience before… Read more »

Pastabagel
Pastabagel
11 years ago

A corollary to acknowledging that we perceive value differently than one another is to separate price and value in our minds. It is too easy to think that because something has a price of X that it is worth X. It isn’t, and usually it’s worth considerably less than X. A thing is priced higher in one market than another usually for good reason. But the good’s value is constant. What you want to do in all circumstances is acquire the target at a price at or below its value (like a value investing approach to shopping). Often this means… Read more »

Kathryn
Kathryn
11 years ago

I’m in the middle of reading a book right now called, “Deluxe” by Dana Thomas, and this is all I can think – how perceived value is such an illusion!

livingmyrichlife
livingmyrichlife
11 years ago

Great examples. I have the same mindset, although to be honest we haven’t patronized our local high school musical or theatre company like we should have. I’ll be putting that on my list for next year.

Elizabeth
Elizabeth
11 years ago

I totally agree with EscapeVelocity. In addition to high school and community productions, our city’s university has a great drama department, and a lot of the local churches have concerts this time of year.

And going local also applies to sports. We Canadians love our hockey, but going to junior level or provincial league games is far less expensive than NHL games — and the community spirit can’t be beat! (Toronto’s farm league the Marlies have a better record that the Leafs!)

tg
tg
11 years ago

And to second Elizabeth’s comment on sports, consider women’s sports teams. Your professional, college, or amateur women’s sports team will be happy for the attendance, and it may be easier to obtain tickets for an equally exciting game. (Of course, once everyone catches on the demand will balance out…)

Movingonup!
Movingonup!
11 years ago

I agree that community events can bring much more joy and value than a large event with a stadium full of people. I loved watching minor league baseball when I lived close to two major league baseball clubs. There was a lot more interaction with people and the hot dogs were much cheaper too!

TosaJen
TosaJen
11 years ago

Agreed with everything JD said. That’s one of the several spending points I’m trying to get across to the kids. My family currently lives in a flat in a duplex we bought so that we can have a stay-at-home parent and comfortably weather job interruptions — that’s “higher perceived value” for us than having us both working for pay and maintaining a bigger house. Like JD, DH and I spend quite a bit of money on live performances. We go to the pro shows to be shaken and stirred, and the amateur shows to take the kids for cheap and… Read more »

Money Minder
Money Minder
11 years ago

How one spends one’s money reflects one’s values. Money is a tool and should be used to enrich your life whether it be wine, theatre tickets, electonic gadgets or a rockin’ pair of shoes!

Andrea
Andrea
11 years ago

I do appreciate an $80 sweater or a $100 skirt or trousers- I just buy them when they show up the thrift shop for $3 or $5(if I don’t wait for half- price days)- I like my skirts and trousers lined and decently made-I just can’t bear to pay the price at a regular store.
I will spend the money to see a Broadway play(although I try to get discount tickets) as well as see local(but I live in a big city) and school productions.

Jennifer
Jennifer
11 years ago

I totally agree! For the past three years, our annual Christmas date has been the local high school’s madrigal Christmas dinner/show. $15/person for dinner and a very entertaining show. We like live music, but we don’t have discerning enough ears to appreciate the professional performance that much more than the reasonably good amateur. If we did, the value attached to the professional performance might be much higher for us.

Ian
Ian
11 years ago

JD,

I think you are spot on in your article. What you’ve found out is that you don’t value the opera for the price that a night at the opera costs.

We all place our value on a given product/service/experience- and it can be wildly different than others.

Taleah
Taleah
11 years ago

I’m kind of distraught that you’d equate community theater with ‘cheesy’. My local community/civic theater is often better than anything the professionals put on. Each of these actors works hard in their spare time to put on these productions. We have Doctors, teachers, businessmen and women.

J.D.
J.D.
11 years ago

@Taleah (#19)
I don’t equate all community theater with cheesy. Trust me, however, when I say that the two shows we’ve seen are cheesy. They’re meant to be. They’re like old-time Dastardly Dan stuff.

Shara
Shara
11 years ago

I would also add that in order to live a frugal lifestyle you have to evaluate what emotional value is added by the price you pay. What I mean by this is some people enjoy something BECAUSE of how much they paid for it. Others put more value because of the deal they got. Some people like the opera because $200 for an evening means it’s exclusive and they like that feeling. It also means they had to have $200 to spend on an evening and it makes them feel like they have more money than they do. NEITHER HAS… Read more »

Chris
Chris
11 years ago

I think the key point, one that is not really explicit in the article, is that you are lucky enough to have tastes that can be satisfied by relatively cheap shows/wine/meals, etc. . .

The same is true for me as well. However, there are some people, whether they have perfect pitch or are an opera snob, who probably couldn’t stand watching a high school production and where only a big (SF, NY) city production would satisfy their tastes. Some people need the best and most expensive, while others derive enjoyment from good, but not great, things.

Lucky
Lucky
11 years ago

Keep an eye on colleges if you want to see professional performers at bargain basement prices.

This year, I was lucky enough to see two world-class bassists in one evening, for five dollars at ASU. Back when I was in college, I got to see Don Giovanni performed by students and faculty ($5), and a national jazz singer ($3!) who blew my mind.

cv
cv
11 years ago

I find I have a similar reaction to restaurants and dinners our much of the time. When I go to a cheap, interesting place and spend $10 for dinner, I often feel great about the experience. When I go to a fancy restaurant and spend $50 for dinner, I often get the same amount or slightly more total enjoyment out of it, but feel disappointed because some part of me things I should get 5 times more enjoyment than I get from the cheap place. My enjoyment-per-dollar is much higher at a less expensive restaurant.

Nate
Nate
11 years ago

Great post! I’ve been thinking about perceived value a lot lately, especially around the gift giving holidays. We live in a world where the value of the gift sometimes depends on the price the gifter paid. For example: If I gave a gift worth $60 and only actual paid $30 (because I got it for a steal), does that lessen the value of my gift? Maybe not, if the recipient doesn’t know the actual price I paid, but what if that person did. There are members in my family who tend to think that you must spend a certain amount… Read more »

bethh
bethh
11 years ago

I agree with Sara, in comment #6 – it’s important to know ourselves and our tastes! I live in the bay area and can go to the SF Opera for $25 bucks (yeah.. very very very very high up and far from the stage). Even so, I find that much as I’d like to love opera, I really don’t. I’ve heard a few arias in passing that are lovely, but the experience doesn’t move me. I thought of trying more expensive seats, but I’d have to at least quadruple my expense to get even remotely decent seats. All in all,… Read more »

sally
sally
11 years ago

Following [email protected]’s comment on determining value through price discovery: Sometimes people do benchmark the value of a good by its market price and then, when this good goes on a mega-sale (like now, when merchants are attempting to woo reluctant spenders with deep discounts this christmas season), they sort of forget that getting a $3,000 TV for $600 is only a “steal” if their personal value for the TV exceeds $600. Price discovery can help you get a better sense of a reasonable market price, but ultimately, it’s the personal value you place on the item that matters. I’m not… Read more »

Stephanie PTY
Stephanie PTY
11 years ago

Funny you should mention those three plays specifically – Guys and Dolls, Oklahoma! and You Can’t Take It With You are all plays that I’ve been involved with at my (now former) high school. The first two as a stage manager, the last one just last month as their director! I heartily agree – community theaters and a high school with dedicated students can provide gems of performances, and the cost makes it a downright steal (often less than the cost of seeing a movie!). Plus, you just know these places really need your support during bad economic times. I… Read more »

April
April
11 years ago

@Lucky–Very true. I saw opera performances put on by my university, and they were all very good and very inexpensive…sometimes free. I know the students were happy to have an audience, too, since my roomie was often one of the performers.

There are inexpensive ways to enjoy operas, if you’re actually into the music and performances, that is, and it’s not all about expensive dinners and premium tickets.

from EU
from EU
11 years ago

Andrea Bocelli is pop music!

from EU
from EU
11 years ago

(a pop SINGER)

Pastabagel
Pastabagel
11 years ago

[email protected]: I’m not sure how far we can take a value investing analogy into shopping for consumption goods, simply because it’s unclear to me how we would define and measure the “fundamentals” of a TV. There’s no PE ratio, etc., to examine. Actually, a TV is a very easy case. You have those technical metrics to compare TV’s across brands: resolution, response time, bit-depth, refresh rate, contrast ratio, brightness, etc. This is especially true in the case of modern high end electronics, like TVs, where the major components of each device for all the brands are made by only a… Read more »

quinsy
quinsy
11 years ago

My husband LOVES the Charles Shaw “extreme value” wine at Trader Joe’s, which I think costs $3 a bottle here ($1.99 in Cali – “Two Buck Chuck”) – I feel like just making the bottle ought to cost more than this, I wonder how they make a profit?? He now refuses to drink anything else, because every time he does, he keeps saying “this may be good, but I know a good wine that only costs $3!!” The only comment on this in the previous post was to say ‘don’t buy it because if it only costs $2, it must… Read more »

Marv
Marv
11 years ago

I feel the same way about going to the movies. I have a hd tv at home. I just can’t see the value in going when I can wait and enjoy a film in the comfort of my house with home cooked food.

Sam
Sam
11 years ago

I like J.D.’s post and what I came away with is that people put different values on different experiences/goods/services. Someone might value really good wine so that $80 bottle is a real treat and they are willing to spend the money. Someone might value really good food so they spend more on fancy eating experiences at home and out and about. For me, I value travel and art. When we travel we stay at either very high end accomodations or very different/unique accomodations, both of which tend to be pricey. We just returned from a Thanksgiving weekend trip and we… Read more »

Scordo.com
Scordo.com
11 years ago

I kept “value” in mind when we were looking for a house; I kept on telling our real estate agent that we were looking for a “value property”. Our agent didn’t get what I was talking about at first, but she eventually figured out that we basically, 1. wouldn’t settle for a home and 2. were looking to get as much for our dollars as possible (in the way of house, property, etc.).

Vince Scordo

Craig
Craig
11 years ago

Good post. I try to spend money that has a higher perceived value for me with my health. For example I will spend money on the gym, vitamins, sport teams, because my activity level and health are important to me. I have a higher perceived value for all of those than what they actually cost because exercise is very important to me. I hate spending money on nightlife and wasting it on expensive drinks. sure I’m having a good night with friends, but I don’t get the same value out of it. That’s my thing, what are other people’s?

E
E
11 years ago

😀 Two buck chuck and opera are really good examples of value being personal. We used to drink two buck chuck, but our tastes have changed, and we no longer enjoy it. It tasted fine as long as we didn’t know what good wine tasted like. I still don’t see the value in wine over $40, but I’m happy when I can find something I really enjoy for $10-25. We would NEVER pay $200 for a night of opera. We just don’t have a taste for it. I’ve paid $30 each for theater tickets, and felt cheated; I’ve paid $10… Read more »

Shara
Shara
11 years ago

I have been sitting here navel gazing and asking myself “What WILL I pay more for just because of personal value?” Most everything that comes to mind doesn’t fit the criteria. I am willing to pay more for intrinsic value. Either quality (ex: we buy nice power tools to last) or performance (ex: We have a nice computer for DH to run simulators for school). I feel so lame! I don’t drink. We don’t go out. I wear jeans to work (and don’t care about clothes). I’ll sometimes go out and get a really nice steak, but only when I’m… Read more »

La BellaDonna
La BellaDonna
11 years ago

A lot depends, as you say, on what you value. Once upon a time, I was very poor, and there was stuff I never thought about; most material goods were in the “going to the museum” category – look, don’t bring home. There was a brief period of “affluence” – to me, anyway – and I bought things I had never had (thriftily). I’m a little older, and while I still look wistfully at things I’d like to own, I realize that (a)I’d rather not OWN any more clutter; (b)I don’t want to LEAVE BEHIND clutter for more family to… Read more »

Jay
Jay
11 years ago

I’ve been thinking about this all day, and come up with the following: I love backpacking, I’ve lived out of my pack in more cities than I can count, and even now as a professional when I travel for fun I end up in a hostel more often than anywhere else. I don’t need to spend more than $20 on a nights sleep when I won’t be spending any time there awake anyway! But when I travel for work I need to be up in the morning smelling good and being well rested. I also need internet in my room,… Read more »

Maharaj
Maharaj
11 years ago

I equate your post with having dinner at McDonald’s vs. a ‘fancy’ restaurant. I suppose someone may value both meals at the same or a similar level (although you may be hard pressed to find that certain someone) … I think though, that deep down you are justifying the saving of money by diminishing the value of the more expensive choice. This then, is not a proper value equation. It would be more honest for you to say that you can’t afford the opera, and that a cheaper alternative exists in the forms of Dairy Queen and high school theater.

Robin
Robin
11 years ago

Shortly after college I bartended at a pretty exclusive wine/champagne/cognac bar. We were required to attend tastings regularly. What I learned is that after the first drink, it didn’t really matter all that much! After about the 3rd or 4th brand we were trying, it could have been any swill. I had the opportunity to try some really good products – the opus ones, and le grand dames, but I learned they really aren’t that much better than a glass from a decent bottle under $10. Which is good because with the job, mortgage, and responsibilities of later years, I… Read more »

Writer's Coin
Writer's Coin
11 years ago

I’m digging the value-investing analogy because that’s the first thing that came to mind as I read the post. Sure, I just happen to be reading The Snowball, the new authorized biography about Warren Buffett. But this idea of finding a personal value of a given thing is neat. Is it a perfect analogy? No, but that doesn’t take away from its neatness.

trb
trb
11 years ago

I think about this a lot, and have enjoyed all the posts and reflection. It’s tough for me to admit that my sensibilities aren’t refined enough to enjoy supposedly higher qualities of some items, but the honesty is healthy for my ego. My ‘cheap is okay because I can’t really tell the difference’ list: mac and cheese; dishes/china; rice; blue jeans (thanks, goodwill!); theatre/live performances; red wine; budget hotel rooms My ‘I’ll pay more for real quality’ list: kitchen knives; beer; socks; peanut butter; carrots (yes, really); ink pens; books; fruit Then there’s a long ‘I wouldn’t want it at… Read more »

Angelo
Angelo
11 years ago

Over the years I have found that money itself has relative value also. I think a $20 is worth less to me now (not just because of inflation or buying power) than it was before. But maybe if I adjust my perspective a little again, I can start treating it like the $20 I did before.

Elizabeth
Elizabeth
11 years ago

I love live events – however we choose which events we go to carefully. We have wonderful free events in the summer as well as some spectacular events which are under $20. For a treat we will go to a production that comes into town and pay attention to which seats we get – ussually second or third tier – but the sound is still good. *For those of you who say you don’t like opera but would like to think about the period of the shows that you have seen. Just as music today is very different from the… Read more »

Foodelf
Foodelf
11 years ago

I found this post a perfect example of reverse snobbery. You didn’t have to have the expensive dinner -or the pricy seats. I’m an opera fan and don’t do either of those things. I don’t think there’s a comparison between professional opera (or the symphony,if it comes to that and amateur musicals or school plays, either. We pick our priorities and the values we place upon them. Personally, your choices in this instance would make me break out in hives and you’ve made it clear that my opera choices would effect you similarly. However, mine is the correct choice for… Read more »

J.D.
J.D.
11 years ago

If I weren’t sick, I’d write a long reply, but I just don’t have it in me.

Trust me that there’s no reverse snobbery going on here. I like the opera. I just don’t like it $200 worth. I agree that maybe I should try a cheaper version of the evening. My point wasn’t to denigrate opera. It was to show how I didn’t get value for my money when I was paying that much.

BethC
BethC
11 years ago

Great post and I definitely agree. I go to one or two pop/rock concerts each year because there are only a few that I really care about and don’t mind shelling out some money for those. I don’t mind a high price for a Broadway show or a symphony concert that I really want to see. I don’t care much about attending sporting events so I’ll only go if it’s a cheap seat because that’s all it’s worth to me. It gets a little tricky if my friends don’t find the same value in certain events, for example if I… Read more »

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