When is Being Cheap Being Too Cheap?

Here's a piece from Crosswalk that talks about being too cheap. It details when the author selected the cheapest painter to do a job and had to have it re-done a couple years later. As such, her "deal" wasn't really that good.

As a result of this experience, she suggests a formula for getting a great deal that balances price and performance. Her suggestion:

The best way to know for sure if you are making the most cost-effective choice is to do the math. In the same way you are careful to consider the unit pricing of items in the grocery store, learn to compare prices on big purchases like paint job, roofs and mattresses using the per use *or* per year cost of the item *or* service being considered.

In other words, a painter who did a job for $500 where the job was expected to last two years (cost of $250 per year) wouldn't be as good as one who cost $1,000 but the job lasted five years ($200 per year.)

It's not exactly the same idea, but our way of buying products is similar to her line of thinking. As such, we very rarely buy the cheapest option available. But we do buy an inexpensive item (car, appliance, etc.) that's expected to last for a long, long time. This way we get what we consider the best bang for our buck.

A key to this strategy for us is to check Consumer Reports as we start the buying process. We especially look for items that CR rates as a "best buy" -- products that are among the tops in their class on performance but at a price that's usually far less than comparable items. So far, this strategy has worked very well for us across all sorts of product categories. And when we haven't followed it, we've gotten ourselves into trouble.

How about you? How do you balance price and performance?

Comments

[Mark]

How in the world can you figure out how long a paint job will last? Sometimes when comparing two similar products, I will weigh the price vs. warranty length, but that doesn't really apply here.

[TheJapChap]

I'm a big fan of CR and have been for years. The only semi-major ($100+) purchase I made without consulting CR was for a printer that was at a deep discount at Sam's Club and it was the last one they had. Long story short, I made a mistake by not researching first. As you mentioned, the cheap deals are not always the best deals!

[Jesse]

I think calling someone and then having them call you back (to save minutes on a landline) is maybe too cheap?

[Matt]

I'm so cheap that I shower at my gym to save water. I also use to take care of "major business" at work to keep from buying toliet paper.