Why Spend Less When You Can Spend More? Part 1


The more we spend on things, the more we value it.

A lot of people who have trouble getting in shape say ignorant (though perfectly rational) things like:

‘’Yeah but I can just get free info on YouTube, so why should I hire a trainer?!’’

Because if you’re struggling to get in shape, clearly, your current (free) process is not working!

There are processes that work on a subconscious, non-rational level such as:

  • Spending money will force you to take it more seriously.

  • Being held accountable to someone (powerful) vs. trying to hold yourself accountable (much less powerful).

  • Your flexibility and freedom will be reduced, increasing adherence. (Constraining Your Freedom Gives You Freedom)

We like things that are very cheap or free. 

Then we can hunt for a bargain.

We like things that are very expensive.

Then we can geek out over all the small details.

But the middle area is this kind of weird commodity area.

Which is why I think most of you should be more extreme.

Too many companies are catering to the middle which makes you blend right in.

Good, if you’re a soldier avoiding to get seen. Bad, if you’re a company trying to get attention in order to sell and help people.

The Amazon version (the cheapest one) is pretty difficult because there can only be one cheapest.

If you structure your entire infrastructure and business model around this, it can be an excellent competitive advantage and economic moat.

(The wrong way to do it though is non-strategic, where you panic because of a lack of customers, discount all your prices and go out of business 3 months later, like most small businesses in our neighborhood.)

On the other end of the spectrum, you’re pricing based on value (‘’But Where Is The Value?’’ Part 1). This also makes it harder to compare you with others based on pricing alone.

If you got a bargain on a hotel, you’ll feel happy.

If you stay in an obscenely expensive hotel, you’ll have a memory that’ll pay you happiness dividends each time you think about it.

If you stay in a hotel that’s somewhere in between, it’ll probably feel like just a place to sleep and you didn’t even get a great price.

So strangely, the way to buy happiness might be to spend 2 amounts of money:

  1. Exceedingly cheap.

  2. Obscenely expensive.

RJ Youngling