What is 'cheap'?

Frugality is easy when you’re seeking the best deal on a very specific item, Hamm writes. It becomes much harder when you’re comparing the merits of two similar items and trying to decide which one is really right for you.

Mike Blake/Reuters/File
Groceries are shown on the shelves at a Vons grocery store in Encinitas, Calif. The 'cheapest' item is not always the one with the lowest sticker price, Hamm writes.

You need some cheddar cheese for a recipe you’re going to make, so you head to the store.

The cheapest block of cheddar cheese costs… let’s say, $1.99. It’s got the logo of a giant multinational corporation on it. You don’t know where it was made. You don’t know what kind of milk is in it. There’s a long list of ingredients, but you don’t know what half of them are.

Right next to it is a block of cheese of the same size for… let’s say, $4.99. It’s got the logo of a dairy farm that’s twenty miles from where you live. There are only six ingredients listed. The package indicates that the milk is local, from cows you can go visit that live on an open pasture that you can also visit, and the cows are treated humanely and are not given hormones or antibiotics of any kind. The cheese was made at that facility, also twenty miles away.

Which cheese is truly the best bargain? 

Obviously, the quality of the second cheese is higher. The ingredient list doesn’t contain anything unknown. The cheese is likely healthier and may actually taste better, too. The cows that make the milk are treated well. There are no antibiotics or hormones floating around in the cheese. The cheese is also local, meaning that the cash is much more likely to stay in the local economy.

Those factors weigh directly against the cost of the cheese, though. Like it or not, the other cheese costs less than half of the expensive cheese.

It’s not an easy thing to decide, especially when there are a bunch of different cheeses on the store shelf, each with advantages and disadvantages. It has to do not only with objective things like price, but subjective things like how you value things like keeping money in the local economy and how much impact food additives have on your personal health over the long term.

Frugality is easy when you’re seeking the best deal on a very specific item. It becomes much harder when you’re comparing the merits of two similar items and trying to decide which one is really right for you.

So, how do you navigate these kinds of murky waters?

First, you need to figure out what you actually value. Is reliability important to you? What about an ingredient list that doesn’t include food additives that you can’t identify? What about the humane treatment of animals in the foods you buy, like milk and eggs and cheese? What about GMOs? What is the value in keeping money local? How desperate is your current money situation? Does the store you’re using practice ethical behavior with its employees and its supply chain?

I can’t tell you the “right” answer to these questions because there is no “right” answer. It comes down to what you value and how much you value it.

For example, if your approach to such issues is to focus entirely on making next week’s bills, then the value of saving $3 is going to supercede those other values. If you’re truly in an “every dollar counts” situation, then the lower price is incredibly important.

On the other hand, if you’re in a position where you place a high value on non-GMO foods or on supporting the local economy or on humane treatment of animals, the higher price of the local cheese might be worth it to you. It is completely valid to decide that products that don’t achieve the standards you find important are the ones that are rip-offs.

It’s worth nothing that choosing the higher-priced items does not mean you abandon bargain shopping. You can still shop around and use coupons for items that live up to whatever values and standards you hold for yourself and seek out items that match those values.

I can certainly share with you where I stand on these issues.

If the price is close, I prefer to buy local items to keep the money local, particularly when I buy directly from the producers themselves – farmers, local breweries, local wineries, and so on. I tolerate about 15% or so higher prices to buy from a local producer.

I am not really concerned at all about GMOs and won’t pay extra to avoid them.

I am concerned with how crops are grown and prefer organic vegetables because of the lack of pesticides and herbicides used, so I’m willing to pay a somewhat higher price for organics – 30% to 40% more or so.

I generally won’t go in the door of any business that I consider to have unethical practices, so I don’t even include them in price comparisons.

I will pay another notable premium – say, 25% or so – to avoid items that have food additives that I’m unfamiliar with on the ingredient list.

I am obsessed with “cost per use” when figuring out which reusable item I should buy and this will generally be the largest factor in helping me figure out which item to get. This sometimes leads to more expensive items if I can expect a lot more uses from it (like an enameled cast iron pot that I’ll use for the rest of my life).

I generally use Consumer Reports when comparing items. I tend to trust their scores and I usually focus hard on their “best buy” selections.

I could go on and on with these ideas, of course, but the key is that I’ve thought about them and I know how much I value them.

The “cheapest” item is not always the one with the lowest sticker price. In fact, it’s often not the one with the lowest sticker price. Instead, the best bargain is always the one that matches what you’re actually looking for in a product at the lowest possible sticker price. Fairly often, the lowest sticker price doesn’t fulfill what I’m looking for.

Bargain hunting is about finding the lowest price on an item that actually matches what I need. Simply buying the cheese with the lowest cost? That’s not bargain hunting. Bargain hunting involves knowing what you’re buying.

The post What Are You Buying? Another Way of Looking at “Cheap” appeared first on The Simple Dollar.

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