Stretch your dollar - Isaac Fang

Stretch your dollar

Isaac Fang CFP ChFC CFA
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November 8, 2018
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Stretch your dollar

Same item different price depending on location

Same but different.

Yes the same item can cost different depending on where it is sold. Most of us will have heard how a can of coke is priced differently be it in a vending machine or at a hotel lounge.

More often than not, that same narrative comes with the explanation for the price differentials. The more important question is, do you buy into that explanation?

There are tangible things, and there are intangible things.

Branding and goodwill are intangibles assigned a value in accounting after netting off the tangibles (the accounting trained will know). The law of one price stipulates that the same item should not be sold for different prices but simple observations prove that there are more exceptions and correspondingly more explanations. (ie marketing and other business costs)

I found this organic vinegar sold in a budget shop located in the heartlands. There I found many other daily use items cheaper than in the usual supermarkets. Of course I checked the expiry dates and I read the labels as well. Let’s just say expectations must be managed and obviously clever sourcing origins of production can well explain much of the price differentials. Nonetheless, the cost of delivering the item to my hand at that moment, has been reduced competitively.

Do I need the intangibles? Sometimes I do and sometimes I don’t. The internet today has removed much of the information asymmetry regarding a whole lot of products. I appreciate the intangibles of a good interior designer in coordinating the renovations of my new home. Surely I can spend time pouring over tons of information but do I really want to do that all the time?

Stretch your dollar by knowing what you want to pay for.

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