October 10, 2009

Why You Can't (and Don't) Buy On Price

Today we're looking at prices from free to crazy.

The High Price of Free
We're getting the Toronto Star newspaper free for six weeks. This isn't a gimmick where you pay for Saturday and get Monday-Friday for free. We're getting the paper Monday through Saturday with no obligation. What a hassle. We glanced through a few issues but now the paper piles up in the recycling bin unread. Free has a price: time.

You probably get lots of free email that you don't read but which doesn't annoy you enough to unsubscribe. You probably gave away personal information to get the freebies. The Internet is basically free, but your behaviour gets tracked anonymously through cookies.

You can get library books free but popular titles have a waiting list and a seven day nonrenewable loan period (at least in Toronto). You pay in time, again. Television is free with commercials or ad-free with paid subscriptions.

There's nothing wrong with free, but you pay in some way. If lunch is free, count on listening to a sales pitch.

Different Prices For Nearly The Same
Have you noticed netbooks, the cute, light, inexpensive portable computers? Most models have nearly identical specifications thanks to pressure from Microsoft and Intel to cap the capabilities. For instance, Microsoft is chopping the maximum screen size from the current 12.1" to 10.2" for Windows 7.

Despite the similarities, you'll find surprisingly large differences in usability, design and quality. Unless you buy solely on price.

Think about macaroni & cheese. Prices differ when the ingredients differ. Real cheese costs more than simulated, powdered stuff. You'll also pay more in a restaurant than at home.

The Same Price For Very Different
Houses of the same price differ too. One place may have plenty of washrooms but use cheap carpet instead of hardwood. Or the kitchen may wow you but the guest bedroom may be the size of a large walk-in closet. Or the house may be perfect but on a major, noisy street.

Advice differs because the advisors vary in quality. Professional designations and experience are often measures of quality. But not always. Either could be dated or irrelevant.

It's very difficult to identify the best advice since you're dealing with an intangible. Better ingredients usually mean better results, but some people can burn water.

Water Water Everywhere
Tap water is essentially free. That's the source of Coca-Cola Dasani and Pepsi Aquafina, but those brands cost more. Often more than soft drinks, which have the added cost of additional ingredients. If you like spending even more, there's Fiji natural artesian water and glacier water (which we drank free atop the Athabasca Glacier in Alberta).

It's all H2O but if the choices were placed in front of you, which would you pick? Which would you want to pick?

Even if you normally drink tap water, what do you do when you're parched and there aren't any water fountains around? Price matters but so do many other factors. We don't always pick free or the cheapest.

Podcast (4:11)

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