There have been a lot of great comments to yesterday's question, but it's been tough to "Feature" many of the interesting ideas because they occurred in the context of longer (and sometimes, ah, meandering) comments. I thought I'd take a minute to summarize a few ideas about value that work for me.
• Use—obviously, something you use a lot is a better value than something you buy but don't use.
• Results—a piece of equipment that allows you to do something good that you couldn't do without it is proving its value every time it yields that desirable result.
• Longevity—the standard idea is that the longer something lasts, the better—but this is really two ideas. The first is durability, meaning how long something works until it breaks or becomes obsolete. The second is how long it stays in your regular rotation. I'm sure most of us have favorite old cameras that we used hard for some period a long time ago, and that we've hung on to out of sentimental attachment to that era in our lives or in gratefulness for the service we got out of the device. They've technically lasted all that time, but we don't use them any more. In that case durability doesn't really matter. So for a piece of equipment to give true value through longevity, it has to continue to function over a long period of time and we have to continue to use it over that period of time.
• Payback—I agonized and agonized over my first DSLR, which I bought used and would still be using if it met the conditions specified in the paragraph above. (It didn't—it broke.) I paid $1,600 for it, used, with a lens. A year or two later, I took a picture with it I couldn't have taken without it, had a print sale, and earned $3,000. I immediately considered that the camera had paid for itself and yielded a dividend of $1,400. I never worried after that about the money I had spent for it: the camera had earned its keep. This, obviously, is how most pros think about their equipment: will it bring in more than it cost? If so, it's a good value even if it was very expensive.
• Pleasure of ownership—let's face it, this is worth something. The opposite is called "a fool's economy"—you buy something cheaper than you wanted because it's more "responsible" or a better deal, but you don't get any pleasure out of owning or using it. In that way, a smaller, less costly, more "sensible" purchase can actually be more of a waste of money.
• Resale value—I've made this argument in depth before, but a purchase can be considered a "rental" of sorts if the resale value is subtracted from the purchase price and amortized over the time differential. That is, buy a camera for $1,500, use it extensively for a year, resell it for $1,200, and the equipment cost to you was $300 for the year, or $25 a month. This idea is fraught with several perils: you can't predict the future value of your equipment on the used market, and you have to be disciplined and go ahead and resell it. But, clearly, a piece of equipment that retains a larger fraction of its purchase price is fairly said to "hold its value."
• The deal—how good a price you got when you bought the thing. People pay way too much attention to this, in my opinion—sometimes even making their choice of what to buy based on what's on sale for the biggest discount. In fact, if you pay the most attention to optimizing value with all the items listed above, this one hardly even matters. Where it does matter is if a good deal allows you buy something you otherwise couldn't or wouldn't. It doesn't matter how good a deal I could get on a new Ferrari, for instance—even at half price it would still be way out of my reach. But the difference between $950 and $450 for a set of golf clubs would make the difference between something I'd never buy and something I might buy, so a discount makes a difference in that respect. Otherwise, "good deals" are highly overrated.
I think if you can hit three or more of these seven value targets, it would add up to a sane and sensible purchase over the long run.
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Original contents copyright 2011 by Michael C. Johnston and/or the bylined author. All Rights Reserved.