Value vs value for money
Discussion
This came up on another thread.
The value (price) of something is usually quite straightforward. It is the price at least one person is prepared to pay at any point in time for something. So it can and does change constantly, depending upon supply and demand. It also implies that we don’t all agree whether the quoted or agreed price for something is worth paying.
It can be argued that value for money is a slightly different concept as it implies something is good value ie a bargain. It doesn’t have to be cheap. A McLaren F1 at £5 million is still too much to pay for 99.99% of us on here yet it is still “good value” because it is much less than the price now paid for them.
On the flip side, it is quite possible to pay £5,000 for a bottle of wine in an expensive restaurant. Likely the mark up over manufacturing cost is many thousands of percent and only a small number of people (probably not including those with the cash to pay for it) could discern the difference between a £5k bottle and a £50 bottle (this seems to be supported by experiments). That suggests a £5k bottle of wine is not good value.
However it could also be argued that value for money is purely subjective like the price/value of something so if somebody thinks spending £5k on a bottle of wine is “value for money” then it is value for money for them and as they are spending the cash no-one else’s opinion need be considered.
Your thoughts?
The value (price) of something is usually quite straightforward. It is the price at least one person is prepared to pay at any point in time for something. So it can and does change constantly, depending upon supply and demand. It also implies that we don’t all agree whether the quoted or agreed price for something is worth paying.
It can be argued that value for money is a slightly different concept as it implies something is good value ie a bargain. It doesn’t have to be cheap. A McLaren F1 at £5 million is still too much to pay for 99.99% of us on here yet it is still “good value” because it is much less than the price now paid for them.
On the flip side, it is quite possible to pay £5,000 for a bottle of wine in an expensive restaurant. Likely the mark up over manufacturing cost is many thousands of percent and only a small number of people (probably not including those with the cash to pay for it) could discern the difference between a £5k bottle and a £50 bottle (this seems to be supported by experiments). That suggests a £5k bottle of wine is not good value.
However it could also be argued that value for money is purely subjective like the price/value of something so if somebody thinks spending £5k on a bottle of wine is “value for money” then it is value for money for them and as they are spending the cash no-one else’s opinion need be considered.
Your thoughts?
I think there's an important distinction to make between objective price (what someone pays) and subjective value (what something is worth to an individual). Price is indeed determined by market forces of supply and demand, but value is deeply personal.
I think "value for money" exists in this subjective-objective tension. It has both a personal component based on what I individually value, and a relative component based on how this compares to alternatives.
I think "value for money" exists in this subjective-objective tension. It has both a personal component based on what I individually value, and a relative component based on how this compares to alternatives.
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