Get Informed, and Don’t Pay that Price!
Ross Gittins is Sydney Morning Herald’s economy editor and is one of my favourite — he has the ability to decipher economy to a point that even a software guy like me could understand. He has written an interest article a few days ago on the Herald, titled The Uninformed Pay the Price. An very interesting article worth a read, and at the end he concluded:
When you use price as a guide to quality you are assuming other buyers are much better informed than you are and that sellers aren’t taking advantage of everybody’s ignorance.
Buyers would get better value for money if, rather than assuming prices are always set fairly, they put a bit more effort into being better informed.
However at the beginning of the article, he stated:
… buyers are often not nearly as well informed. That’s often because they don’t buy such items often enough — or the items don’t account for a big enough part of their budgets — to make it worth the time and effort it would take to be well-informed.
It is great to be informed and not pay the stupid price for crappy items from dodgy merchants. However it is assuming that the monetary equivalent of time and effort is less than the amount you can save for being informed. In reality it is not often the case — we only have 24 hours a day and they are valuable! Sometimes I wonder whether the two hours I spent making sure I am really getting the cheapest price is worth it, when I am only saving something like ten bucks.
How much time should I spend to get informed to justify my time and effort economically? That is the million dollar question.
That is why we have websites like OzBargain who members share the best deals around so you do not have to spend that much time finding them. That is why we have price comparison engines like staticeICE and ShopBot to save you time visiting each individual merchants. That is why we have Product Review and Epinions to keep you informed from other consumers’ experience.
Know your online tools, which make keeping-informed much easier. Get informed, and get better value for your hard-earned money.
Scott, that article was practically taken word for word out of his book that he recently wrote, called Gittenomics, which I’d definitely recommend.
This part of the book explains how a big company will create many similar products (eg washing powder) and market them differently so that they can maximise their profit. And the sad thing is that people fall for it, because in todays wealthy society we often spend more on a product than we need to so that we can reaffirm our position in society. If you notice your friends using Omo, you’d feel inferior if you had No Frills powder sitting on your washing machine when your friends came around. Washing powder is only the start. Big companies spend big dollars trying to enhance this kind of disparity to maximise their profit. Its sad really.
Yeah I meant to buy Gittinomics when I saw the review on SMH a few months ago but haven’t had a chance — thanks for reminding me :)
Another good site for comparing products is http://www.myshopping.com.au I always use this. The whole western society is focused on retail therapy to relieve stress. If they didnt work so hard they wouldnt need too go out and just buy stuff to relive stress. ALaos products might be on bargain but it might be a complete waste if you dont really need it or just want it to show of to your mates you have the latest thing for a few weeks. If you can over come the “keeping up with the jones” you will save a whole lot of money and wont need as work as hard and hence wont need the feel for retail therapy just a marketing stunt for the 50 hour working plp of todays society.
marko — thanks for pointing out MyShopping.com.au. There are actually many product price comparison engines in Australia and I am hoping to revisit some of them here again.
Moreover, you are absolutely right about keeping up with the Jones. Sometimes it is not the Jones that we want to keep up with, but also all these self-gratification with retail therapy — at the end all these money were spent, toys bought but never used, and we are no more happier than our neighbours who don’t have these privilege.
I guess there are differences between being prudent and buying everything cheap. I myself is guilty here by sharing with you guys that there you can find bargains, although in reality I rarely buy anything that I say is cheap — because I don’t need it.
We need a mentality shift for sure.
Just bought “Gittinomics” by the way. $24.26 from Seek Books, paid by PayPal so free delivery (save $6.95). Also going through MoneyBackCo so hopefully I can get 10% back as moneyback :)