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Cheap and cheerful, or expensive and durable?

May 6, 2009

A warm and frugally welcome to our new visitors from Pundit. Thanks to a comment from George Darroch on a post there, we seem to have acquired quite a lot of you.

I was interested to read Eleanor’s post, The Frugal Elitist, because among other things it outlines a strategy that I find quite tempting at times: to buy an expensive item on the basis that it will outlast several cheaper ones, or yield more jollies than several cheaper purchases.

My husband calls me a ‘frugal elitist’ because I insist on buying quality but I don’t buy much. When we moved into our current home we found we needed an extra bookshelf and something to put dishes in. We ended up with a leather and wood bookshelf and a beautiful oak Dutch hutch we will use for the rest of our lives. We could have bought something much cheaper that would have done the job in the interim but I prefer to have less and better stuff. (more)

I think this strategy can be sound but it needs some strong caveats.

First, some things are out of the question for me because I tend to lose or break them easily: quality sunglasses (broke them), leather gloves (lost them).

Second, if you have any aesthetic sense at all, you can be tempted into buying things that are merely beautiful without being more durable, functional, or efficient than the cheap equivalent. For instance, a lot of clothes fall into this category.

Third, I don’t have deep knowledge about many things. For example, I do buy expensive musical instruments. I know their ins and outs, I know what I’m looking for, I know what’s rubbish and what isn’t. I am on much shakier ground with consumer electronics, or cars. If you don’t know what good construction looks like or what fabrics last, how can you tell whether an expensive coat will last one season or five?

Fourth, you have to actually do the maths. For example, my bookshelves include some very cheap ones from the Warehouse. They’re ugly, but they’ve lasted years and several moves, and probably have another move or two left in them. If I need more shelves, my first thought is going to be salvaging some planks and bricks, student-style. The expensive shelves that last a lifetime just don’t add up as a deal for me unless they actual cost less than a lifetime’s supply of cheap ones from the Warehouse. No doubt Eleanor is more averse to squalor than I am, and I don’t disapprove of the mindful purchase of something that gives you great jollies (like my musical instruments), but we shouldn’t kid ourselves that something represents a saving when it isn’t.

Fifth, unless what you are buying will appreciate over time, then it has to be not just the same cost as a lifetime supply of cheap things, but a bit cheaper. Here’s why. Suppose I could buy 5 cheap frobbles that last 5 years each, or one very durable frobble that lasts 25 years for $1000, and suppose I have $1000 lying around. If I take the cheap strategy, I only lay out $200 upfront, and I can invest the remaining $800 until my five years is up, invest the remaining $600 plus interest from the first five years for the next five, and so on. And also, I have the flexibility to decide I’m not that into frobbles any more, and spend my $800 on something else. If I take the expensive strategy, I lose all the interest, and my money is all sunk into one frobble which I may have to sell at a loss if I need the cash.

So I think my overall strategy would be this:

  1. Things I am paid to take away. Free is for people who lack ambition.
  2. Free things.
  3. Where I don’t care about beauty, a succession of cheap things OR one expensive one, whichever has the least lifetime cost, bearing in mind whether an expensive one holds its resale value.
  4. An expensive thing that gives jollies, looks nice, and lasts longer than a bunch of cheap ones.
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9 comments

  1. My favourite frobble is my purple Mary Jane style Doc Martin shoes. They were expensive. I bought them in 2002, and they’re still going strong.


  2. I have a bunch of bookshelves from warehouse stationary that weren’t that expensive, are reasonably solid and look relatively attractive with books on them. Sure, they’re plywood with painted veneer rather than wood, but the quantity of books I have I don’t think much bookcase can be seen under the books anyway.

    And regarding clothing, some of the best quality clothing I have is also the cheapest – because it’s good quality, normally expensive stuff that came second hand from the Salvation Army.


  3. Once again Stephen, too sensible by half. Bah!


  4. When I moved south I didn’t have the rigth clothes. I went to a 2nd hand clothing place and bought 4 Merino jerseys for $25. Some were “labels”. There is nothing wrong with them and excellent quality. Since then I have bought some more really good quality clothes 2nd hand at a fraction of the cost of new.

    I have bought several wooden book cases over the years – all pine, all NZ made and modestly priced. They have lasted really well.


  5. i’m inclined to think there starts a point at which “quality” is over-priced for its value.

    you want to buy at the high-end of quality, at the lowest point of price.

    those warehouse stationary bookshelves are a good example. we have three. if they ever get really wet they’ll be fscked, but… if the inside of the house gets really wet we’re in grief anyhow!


    • Yup – it’s the price/performance curve. You can spend a little bit and get something crap; spend a bit more and get something reasonable; or throw a lot of money at it and get something excellent. Take an example dear to my heart: bicycles. You can get a shit bike for $150 from the Warehouse. It’ll be heavy, cumbersome, and you probably won’t want to ride it much, but it’s a bike. You could pay about $1000-1500 and get a decent bike from a bike shop. It won’t be massively fancy, but it’ll be reasonably light, sturdy, and should be good fun to ride. Or you can drop $6000 on a top of the line pimptastic wonderment, which practically pedals itself up the hills. The point is that the rate of return for cost follows a curve: the $1000 bike is probably much better than the $150 one, but the $6000 bike isn’t that much better than the $1000 one. The trick is to find the point where the curve tips off – where you’re getting the maximum value for your extra cash. After that, “quality is over-priced for its value”. Picking that point is a personal decision, and varies on the goods (bookshelves will have a significantly different price curve to bicycles, to apples, to computers…), your priorities, and market conditions.

      Also worth pointing out that “quality” for some goods may adhere in qualities that you don’t care about. For example, one of the reasons we went with the bookcases we have was that they’re modular, so we could move them easily. We paid more for this. If you didn’t care about that sort of thing, you’d probably regard them as overpriced. Similarly, a lot of the “quality” in a 6k bicycle is in serious weight savings – which is basically useless to me, as if I want to save weight I’ve got 10kg around my middle to worry about first. Plus, it’s so light, I might snap it.


      • i used to do exactly this with PC gear. look for where the price jumps suddenly across the range.

        that’s where to buy.

        will be good, but not bleeding edge.


  6. my entire study is filled with student style bookshelves made up of mdf and bricks

    I like to think of it as retro styling


  7. I take your point, and I think it’s a good one. One other thing to consider, though, is the waste factor of buying (and presumably wearing out/breaking) 5 things rather than 1. If you’re a bit green, or just have an aversion to throwing stuff away, this might be a consideration.

    That said, the point about the relative financial risk is a good one. I’ve seen a lot of people buy expensive toys and then get sick of them, to be sold on at a loss. On the other hand, I’ve also seen people buy cheap and tatty crap that actually put them off activities that they might otherwise have enjoyed. So I guess I’m back to my point about price/performance curves; I think it’s equally a mistake to go too close to the cheap end of the spectrum, when you could get significant performance increases for comparatively reasonable outlay. So, for example, cheap bookshelves are great as long as you’re buying reasonably sturdy ones; the difference between a $100 bookshelf with shelves that fall apart after a year under the strain of a full load of textbooks, vs the $130 set that is slightly more solidly built and lasts two years. That sort of thing.



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