Based on Apple’s success, that impression is right on the money, at least when it comes to certain kinds of consumer and certain products. You can justify paying extra if you care deeply about the product, and/or if the alternatives really can’t compete.
The New Yorker’s James Surowiecki explores how Apple and other high-end retailers have succeeded even during the recession, and also how a different breed of business has gone in a very different direction—offering competence at an inexpensive price—to fill another niche.
Consumers seem to go in one of two ways, especially now that everyone is a bit more careful with their money: We will either pay a premium for something that’s really good, or we will choose something that’s really cheap and good enough. Writes Surowiecki:
For Apple, which has enjoyed enormous success in recent years, “build it and they will pay” is business as usual. But it’s not a universal business truth. On the contrary, companies like Ikea, H. & M., and the makers of the Flip video camera are flourishing not by selling products or services that are “far better” than anyone else’s but by selling things that aren’t bad and cost a lot less. These products are much better than the cheap stuff you used to buy at Woolworth, and they tend to be appealingly styled, but, unlike Apple, the companies aren’t trying to build the best mousetrap out there. Instead, they’re engaged in what Wired recently christened the “good-enough revolution.” For them, the key to success isn’t excellence. It’s well-priced adequacy.
Jim at Bargaineering recently broached the “good enough” topic when asking his readers Why Are You Frugal? Here’s one of the two main reason for his own personal frugality:
The second reason I’m frugal is because there are things I value and things I don’t. For the things I don’t value, I want to pay as little as possible. I don’t pay top dollar for a brand new car, I buy used and off Ebay to get the best deal I can on something reliable. I don’t need a $40,000 or $30,000 or even a $20,000 car (and the car loan that comes with it) because that isn’t important to me. I’m able to save there so that I can spend my money on the things I do care about.
Makes total sense to me. You have to really care about something and get extra enjoyment out of it to make that leap and justify the added expense.
My gut tells me that this isn’t how a lot of consumers operate, however. Even when they don’t personally value a product all that highly (a car, a pair of jeans, fancy china, cell phone, whatever), they do care about the image they project through their ownership of the high-end or dirt-cheap goods.
The question is: Who are you buying the product for—yourself, or somebody else?