The Grand Illusion
The other day, the local newspaper had a front page story announcing a new local, college-based reality television show – entitled “Cheapster.” The idea behind the show is for college students to come up with innovative ways to show their frugality… and the winner will receive $10,000.
While I’m certainly for wise spending, the whole concept of “cheapster” I find appalling, especially the title. Everywhere I look, there’s another facet of the “cheaper is better” belief, from Amazon and WalMart to so many “sales” that a recent survey revealed that many consumers won’t buy anything unless it’s on sale. Part of this emphasis and concern about price is doubtless a result of the long recession and the slow rate of recovery, especially in better-paying jobs, but I think the emphasis goes beyond that… and the implications certainly do.
When we as a society emphasize “cheap,” we’re also inducing, if not forcing, manufacturers and retailers to produce goods in the cheapest way possible, even if that means outsourcing production to third-world sweatshops and child labor. It’s also an inducement to deception, as in the case of the book industry, as I’ve pointed out, where the “cheapest” prices for bestsellers doesn’t necessarily translate into overall lower prices… and where the reduction in book outlets where people can browse has greatly contributed to a decline [in real dollar terms] in sales and certainly in the diversity of books provided by publishing firms, thereby effectively reducing choice. Yes, I know that self-publishing ebooks has taken off, but most people don’t have the time to peruse all those titles… and that’s another facet of reducing choice in a realistic way.
Then there’s telecommunications industry where, despite all the claims to the contrary, overall people are spending far more on communications than ever before and where “basic” service is more expensive now, even for cellphones, than it was in the time of the great Bell monopoly. This tends to be forgotten because long distance calling is “cheap,” if not close to “free.”
“Cheap” airline fares aren’t really, not with all the extra charges, and travelers pay more in the way of inconvenience because the cabins are jammed with luggage to avoid checked bag fees, and that means that flights take longer because it takes longer to load the aircraft… and that, in turn, increases operating costs and overall travel time.
Beyond the myriad deceptions of cheapness is also a larger question. What ever happened to other virtues, such as quality or reliability? And what happened to the idea that price reflects value?
But does all that matter, so long as it’s “cheap”?
How about the phrase ‘economical,’ which has seemingly become equated with ‘cheap’ despite its (more) true meaning of good value at reasonable price?
I, for one, am in a situation where I can buy quality. I am willing to spend more for quality. I suspect that I am not in a majority and that people settle for junk because of three reasons: 1. they can’t afford better, 2. they don’t know any better, or 3. they don’t care.
Not affording is understandable, not knowing is correctable, but not caring irritates me. “Oh, if it breaks I’ll just go buy another one.” Or worse, “When the new version comes out, I’ll just junk this one and upgrade.” How much waste (especially e-waste) can we really afford.
20 years ago I could buy a brand new release hard back for $19.95. today It’s typically $24.95 to $29.95….but I get a 30% bookclub discount. Let’s face it…..it only looks cheaper.
I own a winery and we price our wines in the $12 to 18 dollar range. A neighboring winery is in the $16 to $24 range but offers a discount down to my prices. And people keep telling me I need to offer a bigger discount and lower my prices. Idiots. Every one of them
Interesting blog on wine pricing from WBest. Being honest, I spend a lot of money on wine.
In wine, you generally get what you pay for so ‘cheap’ wines are to be avoided. There are now some Chilean and New Zealand wineries who try to price themselves as fine wines, but then offer discounts, or rather their retailers do (as the law prevents the producer setting a minimum price). However this is pure marketing as the wines do not justify the original price.
I would love to do a blind tasting of WBest’s wines against his neighbour’s.
To LEM’s point, ‘cheap is best’ does not apply across all genres. Try suggesting the mother of a bride to choose cheap bridesmaid dresses.
I actually had a lot of fun arranging a blind wine tasting in France, where we had a dozen or so wines ranging from 1€ all the way up to 19€. The average price in France is around 7€.
The top five rated wines by the group were in order
5€, 2€, 17€, 9€, House Red.
The worst three
1€, 7€, 19€
We realised after that that in some areas, price is actually deeply counterintuitive, and most people tended to prefer the wines in the low to mid end. The outliers are the ones that are harder to grow, or require more investment like Pinot Noir or the Vin de Paille of Jura where the base price of the wine is higher.
We were extremely surprised to see how well the house red rated, given everyone had been criticising the ‘chateau cardboard’ for a couple of days.
The house white on the other hand got used to water the garden. It was truly dire.
I can definitely see the flaws in the cheapness ideal – there has always been an example in history of wealthy people keeping their wealth through buying quality products once, and keeping them a long time, versus the lower class buying a cheap thing every year, and spending much more over time. Try explaining that idea to a student though.
My best link I gave for a friend going to university was a link to the skintfoodie blog. It turns out you can actually eat extremely well on a very low budget, so long as you plan things properly.
Check us out – http://www.bestvineyardswinery.com
A good bit of this may be semantics, but, I have been a professional Purchasing Manager several times in my life, and used the term “best value.” I believe that is what Wine Guy was heading towards, however, it also encompassed the notion of lifecycle costing and a better definition of what was being acquired.
Examples are: if you need to buy claw hammers by the dozens, or gross, to give to guys on a union labor gang in large commercial construction, buying high quality is not necessarily what is best. You need something that is safe and does the job, but, it will be “lost/stolen/destroyed” way before it wears out, so getting fiber glass handled, well made hammers does not derive a higher value. Contrawise, if you are in heavy excavation (aka “Heavy/Highway”) and are doing massive earthmoving, buying inadequate equipment that “costs a lot less” will drive you broke because of breakdowns, lost time, short lifespan and lack of availability of parts and service. Caterpillar would not be able to exist as such a successful business if the industry didn’t already understand this.
The phrase “you get what you pay for” can realistically improved to: “you get what you pay for…or less.”
Anyhow, my 2 cents (I’m too “cheap” to go more than that!)
Cheapster is what leads to Wal-Marts full of cheap junk. Strangely enough, the obsession with cheapness also leads (IMO) to quality products becoming MORE expensive.
BTW, I absolutely love the human verification mechanism. Highly preferable to the largely unreadable captchas.
This blog post reminds me a bit of _Gravity Dreams_, actually, where the particular philosophical question Mr. Modesitt seemed to be addressing was “How honest does a society need to be in order to survive?” What in particular it makes me think of is the fact that everything in truth does have some cost and that cost has to be paid somewhere. It’s just that some costs, like the long-term cost of not spending your shopping money in your community, are much easier to hide. Although I’m not sure that even giant signs over superbox stores that said, “By shopping here you are helping to destroy the economic life of the town you live in” would help . . . . The claim that something is cheaper when it’s just transformed into an externality is the dishonesty. Not that this is deliberate usually.
Interesting posts and an interesting topic. HOWEVER when I was a college student I worked at a series of low wage entry level jobs and was truly poor. I shopped at used clothing stores and used bookstores; used the library; attended free concerts and theater (mostly put on by student performers at my college); walked and biked (on a second hand bike) or took the bus everywhere. I don’t regret the experience at all — I got a great education AND I learned how hard it is to survive on minimum wage (or barely above minimum wage) part time work. Overall I agree that you get what you pay for, and it is worth while to pay for quality goods and services. But lots of people don’t ever get that choice — they are living cheaply not for a challenge, but by necessity.