Over the years I've been impressed by the extent to which value is determined by use.

It's pretty simple, of course: the more use you get out of something, the more value you get out of its purchase price.

I usually illustrate this with two stories about belts, of all things.

Many years ago I was driving in the Maryland suburbs of D.C. with my mother, and we happened to pass by Neiman Marcus, a high-end department store. Mom remarked that it was one of her favorite stores, and that she had just bought a belt there that she liked. Mom enjoyed clothes and spent a lot on them for much of her life. Well, we got into the subject, and it turned out that she had paid $150 for the belt. I was on my own and impecunious at the time, so this scandalized me somewhat: $150 was a lot of money in the '80s, equivalent to about $330 now. Would you pay $330 for a belt?

She defended herself by saying the belt was probably very well made and would last a long time. I argued that she had so many clothes that she was unlikely to use the belt often enough to see any quality difference based on durability. I wasn't very kindly in debating it, I'm afraid—I hope she forgives me!—and I made the point, too forcefully, that she'd probably only wear the belt three times. Which might actually have been accurate. But even she admitted that she probably wouldn't wear it more than ten times.

As a contrasting story, when I was in high school I got a hand-me-down belt from my father. He'd had the belt since he was in college, so it was probably already twenty or twenty-five years old by that time, although I don't think he'd worn it all that much. He was about to throw it away.

He gave it to me, so my investment was zero. I liked it, and it fit, and I ended up wearing that belt almost every day for the next twenty years. It looked pretty good almost up until the end, when it gave out—the end with the holes disintegrated over a short period of time—it died of old age! The belt was from that period when most of the things Americans bought were made in America and when American-made things were well made and made to last.

So, $33 per use (in today's money) for Mom's belt vs. 20 years of daily use for free. Pretty starkly different value equations!

Worst purchase ever?

One of the worst purchases I've ever made in my life was a gigantic tube amplifier for stereo music reproduction. It cost $2,400 back in the '90s. I couldn't afford it, but I've observed that people who have no money often spend unwisely—they crave self-indulgence and reward just like anyone else. The whole story is long. Entertaining, in a can't-look-away sort of way, but long. The short version is that it was a disaster. I couldn't keep that blasted amp running for more than a few hours at a time, and had to have it repaired at considerable expense and inconvenience three times. I ended up trading it to a dealer for $800 in credit.

But here's where my little allegory gets conceptually complicated. I used the $800 credit to buy a demo pair of Tannoy speakers that the dealer was having trouble moving. Not a lot for a pair of floorstanding loudspeakers. The regular price of the speakers was $1,100. They were clad in black fake-woodgrain vinyl, with real wood (stained gray) on the front face only.

So in the beginning I used to moan that I had paid $2,400 for those cheap-ish speakers. Pity poor me?

But here's the rub...I really liked those speakers. They always sounded fine to me. I could easily hear their flaws, but the flaws were benign to my ears and seldom bothered me. On the other hand, I never stopped enjoying the good qualities of their sound. The speakers were very amp-friendly, meaning that they had a high impedance and high efficiency, and I used them with a variety of amps, including, eventually, a much better-built tube amp. They did well with the low-powered tube amp but actually sounded best with a 40-watt-per-channel "budget audiophile" Creek integrated amp designed in Britain by a guy named Mike Creek. In fact, I never knew what the fuss was all about with Creeks until I used one with my Tannoys. Kind of like the way a small engine comes alive with a superlight car, Colin Chapman's Lotus principle.

I used those speakers almost daily, and for many hours on most days...for more than 15 years. They didn't wear out—eventually I just got bored with them and got a hankering, apparently, to throw some money down the loo (speaking British now). I advertised the Tannoys at the local college for $300, but learned to my amazement that music speakers were no longer something college kids were interested in—quite a change from my own youth in the '70s. I ended up giving them away. But by that time I figured they didn't "owe me anything." Maybe not as off-the-chart high-value as Dad's old college belt, but definitely in the same class.

Rationally, I should probably think of that first tube amp as being a $1,600+ loss (the "plus" is because of the attempted repairs), and of the speakers as being initially a good deal that I later got a tremendous amount of use out of such that they became a spectacular deal. But people are pretty sensitive to losses, and tend to feel them more. So the way I'd much rather think about it is that I traded the bad amp for the good speakers. That's because I got more than $2,400 of value out of those Tannoys, and the usefulness I got out of them made up for the misstep with the disaster amp and then some.

It's the same result either way, of course. But the second way of thinking about it softens the loss I took on the tube amp and soothes the soreness of it. It makes me feel better to think of it that way.

This Z7 might be really cheap but there's no way to tell

Bottom line, though: we actually never know when we buy something whether it's a good value or not! Because we don't know how much use we're going to end up getting out of it.

World's cheapest Rolls-Royce

I've had all of the following experiences with cameras:

—>In one case, I chose a money-saving model over the model I really wanted, and managed to get a very good deal on the cheap model I chose. But, I didn't like the camera very much and didn't use it a whole lot. Good value? I'd say no, even though it was, "on paper," a disciplined, frugal purchase when I bought it.

—>In another, I bought a very expensive used camera (think of a word that starts with "L"), used it pretty hard for three years (I took David Vestal's advice and "wore it," putting it on in the morning and taking it off at night, like my shirt) and then managed to sell it for virtually the same amount I bought it for. Good value? I certainly think so. It wasn't a "good buy" when I bought it—it became a good buy when it turned out that it retained such high residual value.

—>In a third case, I bought an expensive digital camera somewhat against my will, and paid more or less full price even though it was essentially a demo unit. But I "took to it," tended to pick it even when I had multiple cameras in the house to choose from, liked it better after using it for years than I liked it when it was new, liked its output, and used it heavily for years. Good buy, I guess not. But good value, absolutely.

In a strange way, it might not even matter how much something costs. What matters is how much use you get out of it. If you buy a third car and never drive it, is it a better value if you got a great deal on it? I'd argue not. And if you splurge and buy an expensive car, doesn't it become a good deal if you use it constantly for 15 years and it's relatively trouble-free? (Remember this guy, Allen Swift? That turned out to be one heck of a high-value Rolls-Royce to him.)

And let's look at that hand-me-down belt. Had I paid $330 for it, would that have been a bad deal? Even being conservative in estimating, I probably wore it 5,000 times. That's a little over six and a half cents per use. That's cheap. On the other hand, if my mother had gotten 50% off her fancy Neiman Marcus belt, that's still $25 per use (according to my estimate) or $7.50 per use (according to hers). Still not a good deal.

You might think that something like a Leica Q2 is prohibitively expensive at $5,000—overpriced Veblen Goods! Ripoff! Status symbol!—and a Canon EOS Rebel T7 kit with two lenses is an especially great value for functionality per dollar at $549 with extras. But you could be wrong about that. What if you love the Leica passionately, and it inspires an invigoration of your interest in photography, and you "bond" with it and use it happily for many years until your hands operate it without thinking, until it's as comfortable as old slippers, and you are constantly, consistently amazed and pleased at the quality of your results? And what if, on the other hand, you bought the Canon but disliked and mistrusted the crappy lenses and were continually annoyed at the squinty viewfinder and cheap plastic of the body, such that you disliked using it, eventually went months without unlimbering the camera from its bag, and even began gradually to drift away from your interest in photography altogether? Which one is the better value then?

The key to getting a good deal isn't actually features per dollar or a matter of frugality or a closeout price. The key to getting a good deal, really, still remains in the future when you buy something. Just because something's a "good deal" when you buy it doesn't actually make it high value. For that, it depends on how much you're going to get out of it.

And that part's up to you!

Mike

ADDENDUM: Here's a great backgrounder on Allen Swift and his Rolls if you want more of that story.

Original contents copyright 2020 by Michael C. Johnston and/or the bylined author. All Rights Reserved. Links in this post may be to our affiliates; sales through affiliate links may benefit this site.

(To see all the comments, click on the "Comments" link below.)

Featured Comments from:

Sroyon: "This is interesting to me because my Ph.D. thesis was about environmental valuation, and I got quite deep into theories of, and distinctions between, price and value—more philosophy than economics, in some ways! In your Tale of Two Belts, I think you're focusing mostly on what economists call 'use value,' possibly ignoring 'nonuse value' (this book by the US Natural Resource Council defines and explains the terms in more detail). Economists are increasingly recognising that we can value (get utility from) things which we don't use—pride of possession, for example, or the idea of 'existence value' proposed by the economist John Krutilla. Who knows—maybe your mother got a lot of joy from the rare occasions when she wore that belt, or even simply from knowing that it was there in her wardrobe. Modern economics in some ways is moving towards more subjective (and therefore also more complicated) theories of value."

MarkB: "Satisfaction...that's what it's all about for me. Does this thing satisfy me in some way; aesthetically, practically, financially, emotionally, etc.? The answer drives my major purchases, and explains some odd attachments I have to physical objects. I have a pair of old sausage tongs (!) given to me by my father about which I (only half-) jokingly tell my own son, '...and one day, I will pass these tongs on to you.' They satisfy me in almost every way, particularly when grilling sausages. On top of that, I get to think of my father (who is still alive at 98) whenever I open the cutlery drawer, which is often, and that's as it should be."

albert erickson: "Mike, one of my favorite lines and one that my wife gets tried of hearing is, 'the most expensive asset we own is one we don't use.' This in a roundabout way is what you are saying, and truer words were never spoken. I am in the process of selling via ebay my little X100f, not because I don't like the camera—I do—but I am just not using it. I tend to gravitate to the Nikon Z that I own for many reasons. I am trying to live up to the lifestyle that less is more. It is a goal and one that is very hard to obtain especially if one loves cameras and lenses. Maybe I missed the point of your piece but that is what I got out of the article. Great job, buy what you love but use what you love or sell it."

Terry Burnes: "We place too much emphasis on 'the deal.' Buy a new car and the first thing many will ask is what you paid, what kind of discount or deal you got. Of course this is usually a long-term purchase and no one factors in the ongoing costs of ownership, interest, insurance, service, repairs, fuel, depreciation. You might at most save a few thousand dollars compared to what someone else pays, but by the time you factor in all the costs that amount becomes insignificant. Especially if you end up with a car you're not happy with. You certainly don't want to get ripped off and need to respect your budget, but once those are taken care of you're better off focusing on whether this purchase will deliver whatever you hope to get out of it, not whether you saved a few bucks up front."

Ilkka: "Your story on prices of belts brought back memories. When I was a student I needed to buy a new wallet. Old one had broken. I went to a big department store and found two that I liked. One cost about 40, the other 150. I sort of liked the 150 one better, but the cheaper one was also okay. I took out my old wallet and looked inside. There was 150 inside my wallet. I figured that if I spend all that on a new wallet, I don’t really need it because it would be empty. So I bought the cheaper one and put the remaining 110 inside. Happy."

Crabby Umbo (partial comment): "For some reason, this brings to mind my high-school economics teacher, who, when we would complain about the price of something we purchased, would say: 'Well, you bought it, didn't you? So apparently the price was what you were willing to pay, otherwise you wouldn't have bought it!' I've thought about that many times over the last 50 years when making, or not making purchases."

JG (partial comment): "When I was an audio-fool, I never bought any component new-in-the-box unless I had absolutely no choice. If I bought something from a dealer or manufacturer, I would always buy the specific sample I heard, because it was the performance of that particular component that formed the basis for my purchase decision. Maybe there was a better performer inside a box back in the storeroom, in which case I lost the gamble, but there was also zero risk of ending up with one that performed worse and there is some peace of mind to be had from that.

"Of course, [perhaps the best approach] is to have a very good friend who always has the latest gear and will let you borrow it for a week or two to test it yourself. I am fortunate to be in such a position, and [this has] likely saved me untold thousands of dollars over the years, either by steering clear of gear that doesn't work for me or buying used gear with a known history and proven performance from a friend instead of rolling the dice on eBay or buy-and-sell forums and buying it from a stranger."

Howard: "Guess the Rolex Submariner purchased in 1977 for $278 and still own was a bargain."

Stephen Scharf: "So...what was the tube amp you bought?"

Mike replies: Melos High-Current Triode ST-125 From Hell. It's possible the last bit was not part of the official product name.

