Yet, quite often, I find myself not always going for the rock-bottom price on specific items. I’ll pay a bit of a premium at a farmers’ market, for example. I’ll stop at the tiny market in my town for a few items quite regularly.
Why would I regularly abandon the lowest possible price? For me, there are a number of factors at work.
Is the location convenient? For the most part, this is the “time” factor. I’m willing to pay a small premium for an item if it’s convenient for me to buy it. If I need a loaf of bread or a dozen eggs in a pinch, I’m often willing to pay the premium prices at the local market just a couple blocks from my home, especially when the next closest market is ten miles away. If I need a book for research purposes, I’ll often get it from PaperBackSwap or from Amazon, simply because of the convenience of clicking a few times to get the item in the mail.
Is there a distinguishable quality difference between the items? I’ll often pay more for a produce item that’s exceptionally fresh versus one that’s been sitting on the grocer’s shelf for a number of days. They’re the same item, more or less, but one will taste better and have more nutritional value than the other, and that’s worth a premium to me.
Am I buying from a local business or local producer? Buying local means that the money stays in the local economy. Some portion of that money winds up in the local tax system, improving schools and other services that I use every day, and other portions of that money wind up getting spent again within the local system. Some fraction might be donated to local charities, and some amount may go towards providing jobs in the community. To me, this is worth a small premium on the price, particularly since the items are often freshly-made, which means there’s a quality difference at work here, too.
Is the business ethical? Does the business treat its employees well? Does the business treat the environment well? Does the business interact well with the community? Some businesses make a great effort to be ethical members of the local community - other businesses could care less and view the environment and their employees as cogs in the machine. To me, it’s worth it to spend a little more at businesses that are stewards of the environment and of their employees.
Does the business have good customer service? A great example of this (from my personal experience) is Apple and Dell. Some businesses go the extra mile to provide good customer service for their customers (Apple), while others make it very difficult to get appropriate help (Dell). To me, that makes me more likely to pay a premium for an Apple product when a comparable one is available from Dell. I apply a similar philosophy to almost any business where service is a useful component, like grocery stores, for example.
Does the business provide a good shopping experience? I like to call this the Aldi factor. If I feel uncomfortable going to a particular store, I won’t go there, even if there are great bargains to be had. On the other hand, if one store is much cleaner than another store, I’ll go to the cleaner store even if the prices are slightly higher. Are the salespeople pushy? That pushes me away. Can I find a salesperson if I need one, though? That’ll bring me in. Is there plenty of room, or are we pushed in there like rats in a maze?
In the race to always get the lowest price, many of the above factors are tossed out the window. The lowest prices often come from companies that don’t have the strongest ethical standards and don’t pay their employees well and don’t participate in the community.
In other words, there’s often an extra hidden cost in always seeking the lowest price. Is that an extra cost you’re happy paying?
I can’t give you an answer to that question, because this is one of those points where personal values and personal finance intersect. The things that you find to be “right” in your life are likely different than mine.
However, I can say that in my own life, I place a significant extra value on buying local produce and dairy products versus buying items that are shipped in. I place a slight premium on the ethics of the business, but I often find that companies with questionable practices often have many competitors and it’s trivial to simply use more ethical businesses. I have something of a minimal standard for customer service and shopping experience - if a company doesn’t meet that standard, I just don’t give them my business, regardless of price, but above that level, I view all competitors roughly equally.
Where do you stand? What additional factors are important to you when making a purchase?
The Simple Dollar chronicles a man's road to recovery from "total financial meltdown." As author Trent Hamm puts it, "The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two." We'll post a couple of entries a week, but you can check out his writing daily at www.thesimpledollar.com