Is going cheap better than spending for quality? Is it always better to get the lowest possible price? Is cheaper better than....what?
More and more people are shopping at Wal-Mart. Why? Because they`re either losing their jobs or they`re worried about reduced income. They believe that Wal-Mart offers "quality" merchandise for below typical prices. That`s actually not true.
Wal-Mart has been raising their prices steadily over the past couple of years. We know because we`ve been shopping there for quite a while. We also track prices at many other local stores, and we live in an area that has a very strong and diversified retail sector.
Over the past few months we`ve found that Wal-Mart prices are now higher than most other stores, excepting for the major name stores.
We`ve also found that Wal-Mart doesn`t stock many items we can get at other stores. Why? Because they can`t force those manufacturers to sell at very low wholesale pricing.
Additionally, we`ve found that many products have been replaced with super-cheap versions manufactured in China. They fall apart or don`t work, so we end up having to buy them all over again, usually at a higher price for better quality.
Wal-Mart is a great example of retail. But what about services? Think about building a Web site, developing a shopping cart, going to a doctor, getting your car repaired, or hiring someone as an outsource solution for some part of your life.
Price -vs- Quality has been a topic for ages. It relates to the question of when to raise or lower prices, and whether to sell many items cheap or a few items at high prices. In today`s economy, lots of people are re-examining the same question.
We also know that "you get what you pay for." But a subtle change to that old platitude comes into play when you examine a fundamental shift in market prices.
For example, if the price of piano lessons has been $50 per hour (I`m making up a price) for years, then that`s the price. But that price relates to the overall economy. It relates to typical wages, typical costs, typical utilities, typical energy prices and so forth.
What if wages and goods have been over-priced for a few years? Suppose inflation has pushed up entry-level wages to unsustainable levels? If a family wage-earner makes $40,000/yr. to be an administrative assistant, then $50/hr. is a simple and affordable price.
On the other hand, if more and more people are losing their jobs, and the new entry-level is minimum wage, then $50/hr. becomes expensive.
Suppose the piano teacher has reduced his or her lifestyle, cut costs, and restructured. And that piano teacher offers lessons for $20/hr. Although the market rate is $50, can we "automatically" say that the $20 lessons must not be very good?
Price and quality directly connect with market stability. These days, almost anyone can agree that we have almost no stability whatsoever. With the DOW Jones Industrial Average acting like a roller-coaster, and housing prices collapsing almost everywhere, do we have stability?
And does that stability apply only to the financial or housing sector? We`ve seen the price of a pound of butter go from $1.49 to $3, over and over again. For no apparent reason. That`s doubling the price, then falling backward, then doubling again. And again and again.
What about gas prices, going from $2 to $4, then back, then up again?
Without market stability, how do we say that "you get what you pay for?" Does that even mean anything anymore? If not, then how do you judge quality?
More importantly, is it worth having to buy the same thing twice because the first purchase fell apart? Many people do exactly that, and then get frustrated because they can`t get "good stuff" anymore.
When you look for the lowest price, do you consider at all the underlying quality of what you`re hoping to buy?