I like to compartmentalize things.
Break things down to simpler parts before stitching them together again.
So I thought... what do I pay for when I'm buying something?
What am I trading off? Which part is rationale or not?
Is something more expensive cos it's better quality? Or am I just paying for convenience? Or am I buying a feeling? Or what?
So I thought about a few scenarios...
Currently I own a XiaoMi phone. It's cheap. I buy it as a phone. Nothing fancy. But I'm open to discuss about better specs and stuff.
So I bought the phone off the retail shop, and paid $219.
My wife bought the same phone online and paid $201. So I conclude that the difference $18 is the convenience of having the phone immediately instead of waiting for the delivery.
Then I think about the new iPhone X. It's around $1000. I'm not going to go into detailed specs. That's not the point of the post.
I think the iPhone X is pretty cool. It has a better processor, better graphics, better camera, front and back, facial recognition, people think you're cool when you own an iPhone, etc.
So I'd consider that the additional $800 is spent on all these other parts.
But wait... there's another aspect... within this $800, is also the cost of transferring to Android. There are many people who don't want to switch to Android cos it is just a hassle to administer. There's a lot of other folks who have switched to Android and proclaimed that they will never go back to iPhone every again. Me included. But, it is very real, that some people just keep using iPhone cos they can't be bothered to do the switching.
Next, let's look at food.
So I can buy a normal striploin and fry it at home. It costs around $10.
Or I can buy a ribeye at $15.
Or I can buy a wagyu steak at around $30.
All of these, I think it's pretty much paying straight off for a better cut of meat.
So what are we buying at a restaurant? Or a higher class restaurant?
I think we could get a striploin or ribeye at around $20-$30 at a simple restaurant?
Or if we are at a more classy restaurant, they would cost $60-$80.
So at a simple restaurant, we pay for maybe some skill of the chef, convenience of not cleaning up, some ambiance, air conditioning. So that's the premium of around $10-$20 per order above what I could get at a supermarket.
Whereas, the premium at a pricey restaurant would probably be paying for better service, better ambiance, maybe better chef skill, better cutlery, chairs, music, etc. Is this worth the additional $50 premium? I don't know. That's for you to decide.
For me, I like my food. Quality and cooking skill counts more than the overall experience. I've been to expensive places which had great service but sub standard food and I just felt stupid for paying a premium on lousy food.
Furthermore, I'm not too bad a cook so I'd rate my skills above Jack's place but probably lower than some "atas" restaurant.
Then I think about watches... $10 Casio, vs $10,000 Rolex, vs $15,000 Audemars Piguet.
Casio tells the time... ok simple as that.
Some Rolex's are made with gold, so there's some value there, for luxury watches, you're supposed to be buying the craft, the skill of the watch maker, the watch movement, you're also paying for the service at the counter, probably some other perks where only Rolex customers may know of? Like membership? Some exclusive club? I dunno...
Then for APs... what you're paying for is really really very much the brand and the perceived skill of the watch maker. It's more a piece of art rather than the actual raw materials put into making the item. I don't think customers are paying for better quality steel or straps, but rather the brand and how it makes them feel when wearing it.
Same as for Patek Philippe, the branding of "You never actually own a Patek Philippe, you merely look after it for the next generation."
How about transport?
Bicycle? Let's not talk about this one...
MRT is cheap...
Then taxis and Uber and Grab are the next in line. It's easy to see what we are paying for. An air conditioned personal transport to send you to the doorstep. The premium for this is significant as compared to MRT or bus. Essentially paying for comfort and convenience. Not much luxury here.
Then there's the car... a basic one, around $1200 per month, I pay for comfort and even more convenience I can use it as I like without having to wait for a cab to come. Or I don't have the risk that I encounter a grumpy taxi uncle or inexperienced Uber driver. I don't feel any sense of pride in owning a basic car, maybe some folks may think it's an accomplishment already?
Then what if I got a Camry? Around $1800 a month? I think it's a better car, more comfort, more spacious, more power under the hood. Maybe I'd feel happier in a Camry? It's a bigger car? More pride? I dunno. Could be safer cos there's better material?
Then we go into the luxury space with Mercedes or BMWs. I don't even know how much per month for this. Maybe $2500? The components are usually better, definitely safer cos they take impact better. More power under the hood. But mainly, we're paying for the feel good factor. It's a Mercedes... Or BMW... it's just better... Cos... I find it tough to reconcile the price:value equation between a Camry vs a Merc/BMW.
So I think the differential between a Camry and Merc/BMW is mainly the brand, feel good, pride, the typical luxury feelings.
The thing I'm trying to highlight is... what are we paying for? Is it worth it in your eyes? Not for me to decide. Maybe some people like the feel good factor. That's your choice.
For me, I don't mind paying for raw materials and quality items. Like better meat. But I'm not willing to pay for convenience, like, I prefer to cook at home cos I don't find the premium for washing and cooking is worth it.
But I'd go to a restaurant for curry fish head, where I know the fish head is pretty cheap, but I'm willing to pay $30 for it cos... well... I can't cook curry well at home and I don't want to clean that up as well. So in this case, I'm willing to pay for the skill and convenience.
Or for watches... I don't think I'd ever buy one even if I had $10m... cos I don't like an additional weight on my wrist. I can tell time with my phone so that serves it's purpose. Furthermore, if I were to buy a $10k watch. I wouldn't wear it out in fear of scratching it. So in this case, I don't even want to pay for the raw materials, cos to me, there's no benefit in it.
Oohh.. but the car is different. If I had $10m, I'd likely get a Camry. We really enjoy our car and the ability to drive around when we like it. We do appreciate the comfort and flexibility. Yes, I admit. It's irrational. Cos I could just get Uber Exec and probably pay less per ride and still be able to ride in comfort and style. But I like driving. It's like a hobby... really...
For those who haven't owned a car, please don't buy one. It really spoils you. I mean that in all seriousness. I never thought I'd get addicted to having a car. But after the first car, there's really a desire to just keep having it. After I scrapped the first car, I didn't have a car for a year. I was still fine. But I always did hope to get another vehicle, cos really, having it is just better than not having it. Somehow, once you start, it's hard to stop, you won't feel it til you've gotten the first one.
I never felt this way before my first car. I always thought that I would never feel this way when I was younger. I always thought a car was unnecessary and that even if I got a car, I could easily not want it when it was time to let go. I can still let it go, but I still want it.
Or for holidays? Some people go on packaged tours? It's definitely a premium, but some people like the convenience of someone to bring them around, don't need to do their own research, etc. I don't like tours cos it's not at my own pace, but some other folks like them, or there's also the convenience for the elderly cos there's always transport available and they don't need to walk around too much or find transport in a foreign country.
I mean all these are all valid reasons to pay more. Cos we are trading money for something else. Whether it is convenience, feeling good, better materials, whatever. And everyone has their reason to buy it. It could be subconscious or conscious. To me, I like being conscious of my desires. I don't try justifying irrational behaviour. Typically, I try to admit it.
Like the Camry or Merc. I really would like to own one if I could comfortably afford it. Still a 2nd hand one but, nonetheless, an unnecessary desire.
As always... awareness will set you free...
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Break things down to simpler parts before stitching them together again.
So I thought... what do I pay for when I'm buying something?
What am I trading off? Which part is rationale or not?
Is something more expensive cos it's better quality? Or am I just paying for convenience? Or am I buying a feeling? Or what?
So I thought about a few scenarios...
Currently I own a XiaoMi phone. It's cheap. I buy it as a phone. Nothing fancy. But I'm open to discuss about better specs and stuff.
So I bought the phone off the retail shop, and paid $219.
My wife bought the same phone online and paid $201. So I conclude that the difference $18 is the convenience of having the phone immediately instead of waiting for the delivery.
Then I think about the new iPhone X. It's around $1000. I'm not going to go into detailed specs. That's not the point of the post.
I think the iPhone X is pretty cool. It has a better processor, better graphics, better camera, front and back, facial recognition, people think you're cool when you own an iPhone, etc.
So I'd consider that the additional $800 is spent on all these other parts.
But wait... there's another aspect... within this $800, is also the cost of transferring to Android. There are many people who don't want to switch to Android cos it is just a hassle to administer. There's a lot of other folks who have switched to Android and proclaimed that they will never go back to iPhone every again. Me included. But, it is very real, that some people just keep using iPhone cos they can't be bothered to do the switching.
Next, let's look at food.
So I can buy a normal striploin and fry it at home. It costs around $10.
Or I can buy a ribeye at $15.
Or I can buy a wagyu steak at around $30.
All of these, I think it's pretty much paying straight off for a better cut of meat.
So what are we buying at a restaurant? Or a higher class restaurant?
I think we could get a striploin or ribeye at around $20-$30 at a simple restaurant?
Or if we are at a more classy restaurant, they would cost $60-$80.
So at a simple restaurant, we pay for maybe some skill of the chef, convenience of not cleaning up, some ambiance, air conditioning. So that's the premium of around $10-$20 per order above what I could get at a supermarket.
Whereas, the premium at a pricey restaurant would probably be paying for better service, better ambiance, maybe better chef skill, better cutlery, chairs, music, etc. Is this worth the additional $50 premium? I don't know. That's for you to decide.
For me, I like my food. Quality and cooking skill counts more than the overall experience. I've been to expensive places which had great service but sub standard food and I just felt stupid for paying a premium on lousy food.
Furthermore, I'm not too bad a cook so I'd rate my skills above Jack's place but probably lower than some "atas" restaurant.
Then I think about watches... $10 Casio, vs $10,000 Rolex, vs $15,000 Audemars Piguet.
Casio tells the time... ok simple as that.
Some Rolex's are made with gold, so there's some value there, for luxury watches, you're supposed to be buying the craft, the skill of the watch maker, the watch movement, you're also paying for the service at the counter, probably some other perks where only Rolex customers may know of? Like membership? Some exclusive club? I dunno...
Then for APs... what you're paying for is really really very much the brand and the perceived skill of the watch maker. It's more a piece of art rather than the actual raw materials put into making the item. I don't think customers are paying for better quality steel or straps, but rather the brand and how it makes them feel when wearing it.
Same as for Patek Philippe, the branding of "You never actually own a Patek Philippe, you merely look after it for the next generation."
How about transport?
Bicycle? Let's not talk about this one...
MRT is cheap...
Then taxis and Uber and Grab are the next in line. It's easy to see what we are paying for. An air conditioned personal transport to send you to the doorstep. The premium for this is significant as compared to MRT or bus. Essentially paying for comfort and convenience. Not much luxury here.
Then there's the car... a basic one, around $1200 per month, I pay for comfort and even more convenience I can use it as I like without having to wait for a cab to come. Or I don't have the risk that I encounter a grumpy taxi uncle or inexperienced Uber driver. I don't feel any sense of pride in owning a basic car, maybe some folks may think it's an accomplishment already?
Then what if I got a Camry? Around $1800 a month? I think it's a better car, more comfort, more spacious, more power under the hood. Maybe I'd feel happier in a Camry? It's a bigger car? More pride? I dunno. Could be safer cos there's better material?
Then we go into the luxury space with Mercedes or BMWs. I don't even know how much per month for this. Maybe $2500? The components are usually better, definitely safer cos they take impact better. More power under the hood. But mainly, we're paying for the feel good factor. It's a Mercedes... Or BMW... it's just better... Cos... I find it tough to reconcile the price:value equation between a Camry vs a Merc/BMW.
So I think the differential between a Camry and Merc/BMW is mainly the brand, feel good, pride, the typical luxury feelings.
The thing I'm trying to highlight is... what are we paying for? Is it worth it in your eyes? Not for me to decide. Maybe some people like the feel good factor. That's your choice.
For me, I don't mind paying for raw materials and quality items. Like better meat. But I'm not willing to pay for convenience, like, I prefer to cook at home cos I don't find the premium for washing and cooking is worth it.
But I'd go to a restaurant for curry fish head, where I know the fish head is pretty cheap, but I'm willing to pay $30 for it cos... well... I can't cook curry well at home and I don't want to clean that up as well. So in this case, I'm willing to pay for the skill and convenience.
Or for watches... I don't think I'd ever buy one even if I had $10m... cos I don't like an additional weight on my wrist. I can tell time with my phone so that serves it's purpose. Furthermore, if I were to buy a $10k watch. I wouldn't wear it out in fear of scratching it. So in this case, I don't even want to pay for the raw materials, cos to me, there's no benefit in it.
Oohh.. but the car is different. If I had $10m, I'd likely get a Camry. We really enjoy our car and the ability to drive around when we like it. We do appreciate the comfort and flexibility. Yes, I admit. It's irrational. Cos I could just get Uber Exec and probably pay less per ride and still be able to ride in comfort and style. But I like driving. It's like a hobby... really...
For those who haven't owned a car, please don't buy one. It really spoils you. I mean that in all seriousness. I never thought I'd get addicted to having a car. But after the first car, there's really a desire to just keep having it. After I scrapped the first car, I didn't have a car for a year. I was still fine. But I always did hope to get another vehicle, cos really, having it is just better than not having it. Somehow, once you start, it's hard to stop, you won't feel it til you've gotten the first one.
I never felt this way before my first car. I always thought that I would never feel this way when I was younger. I always thought a car was unnecessary and that even if I got a car, I could easily not want it when it was time to let go. I can still let it go, but I still want it.
Or for holidays? Some people go on packaged tours? It's definitely a premium, but some people like the convenience of someone to bring them around, don't need to do their own research, etc. I don't like tours cos it's not at my own pace, but some other folks like them, or there's also the convenience for the elderly cos there's always transport available and they don't need to walk around too much or find transport in a foreign country.
I mean all these are all valid reasons to pay more. Cos we are trading money for something else. Whether it is convenience, feeling good, better materials, whatever. And everyone has their reason to buy it. It could be subconscious or conscious. To me, I like being conscious of my desires. I don't try justifying irrational behaviour. Typically, I try to admit it.
Like the Camry or Merc. I really would like to own one if I could comfortably afford it. Still a 2nd hand one but, nonetheless, an unnecessary desire.
As always... awareness will set you free...
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