How to Value a Product

Value investing works because you purchase shares in a company at a great value. Same can be applied to your everyday life so that you buy the items that are more valuable to you. One must however watch out for inflated valuation that one might perceive. And one could also be astute enough to reduce the perceived value of an item through understanding and generally not caring about brand names and apparent value created by marketing. If exercised properly, this method of purchasing items can take you very far in reducing your expenditures.

How are we going to ready this is beat the bush today i’m going to talk about the dynamics of valuing a product oftentimes when you go to the store there’s an msrp price there’s also a sale price that it could have and there’s also a street price at which you may not see at the store the final price you should also consider is how much this particular item is value

To you now check out this chart you always have an msrp value which is the manufacturer’s suggested retail value which is generally really high up there the street price is usually what the vendors normally sell it for and you call it street because that’s what you can normally get the product for in some sales the store might actually mark down the value of these

Items so that it’s lower than street price at which point people will buy the product if it’s lower than what its value to them now if you value this particular item really low you’re obviously not going to buy however if somehow this value became really high for you and it becomes a little bit higher than the sale value then in your mind you feel like oh yeah

This price that they’re offering is lower than what its value to you so then you would actually go and buy it if the value to you never changes however they keep on reducing the price a little bit by little and at some point you see this because sometimes when they reduce prices on things they go in tiers it goes a little bit more and a little bit more especially

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In liquidation sale where they go oh 25 percent off and then the next week they go 35 percent off and the week after day they go 55 percent off until at some point almost everything is gone because some of the really low valued products get reduced price enough so that people would actually buy it so then it would look something like this the sale value keep on

Going down down down and then finally below the value to you at which point you think oh the value is higher than the sale price so i’m going to buy now let’s take for example you normally buy a drink on the street it’s one dollar however if you go to a theme park and there’s nowhere else to buy the drink so they essentially haven’t monopoly on it so they can offer

To sell you the drink for a lot higher like three dollars four dollars even so due to this artificial increase of value to you you need the drink or else you get dehydrated so it’s something that you cannot avoid the value to you gradually increases until at which point you really really need that drink and so the value to you even if it’s like four dollars six

Dollars even you’re willing to pay this amount because you absolutely need this water other times let’s say you buy a part that’s only one dollar however you use this part to fix something that’s $200 this $1 part might actually work maybe $20 for you however you can still go outside and be able to buy this part for only one dollar therefore when you bring this part

Home and then you fix something and you go wow i only paid one dollar for it then this part is really really worth it to you and so we’re looking for these type of products where it’s really high value for yourself except on the market is really low value now let’s take cotton candy out of here for example before it goes into the machine it’s just basically sugar

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The cost of the sugar is really low it might be only like a few cents worth of sugar so before putting it into this machine is actually really really low value over here and you know you’re not going to spend whatever they’re asking you to pay for that cotton candy if it’s not made yet however after it goes through this pot in candy machine it increases its value

Dramatically because it then becomes something that you actually want so this machine actually produces a lot of value so then it inches up and up to maybe all the way over here to the point where you go oh yeah i’m going to buy this cotton candy because it’s worth it you know you want something sweet to eat although i don’t recommend it because it’s just all sugar

Anyway the value increases beyond the sale price that they are having it for then you would actually buy it so a lot of times being able to adjust the value to you it’s very important from keeping yourself from buying something people who have a shopping problem often place the value of these item a little way too high over here so everything seems to be a really

Good deal even if it’s like oh 10% off 20% off they’re like oh yeah you know i want this i want this let me get this and everything else the secret to not buying as much as well as increasing net worth and building wealth is to only buy things that are really high valued and yet they are really low price so in a sense whenever you look at a product the value of

It is not that high to you because it does not give you that good as utility then it’s naturally going to go below the sale value so then the sale has to be really really good before you would actually buy so if you have the value of these things calibrated to yourself in other words not caring too much about the brand rather focus on the utility of the item

Itself then you would naturally value these items a lot less and therefore you would not buy these items because you would perceive these items as being expensive even at the street price even if they take a sale on it all of this really is just taking a page out of value investing which is the preferred method of investing for warren buffett you could think of

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Buying products just like you’re buying stock in the company when you buy a part i think of it as one share of that particular item you have to look at the value and utility of the item to yourself not to other people if you do it this way then everything that you buy will be highly valuable to you you’re actually paying really little for all these products i do

Realize that in order to cast aside not caring what people think about the products that you buy takes a lot of willpower in itself it does take a bit of training but with the training you’re able to get a lot more value per dollar that you’re spending i hope you enjoyed this way of thinking about buying products because the way you perceive the product that rectly

Influences you on if you would actually have an urge to buy or not don’t forget to give me a like on this video comment down below let me know ways that you’re able to reduce the value of an item to yourself if you’re interested in supporting my channel don’t forget to check out my audible link down in the video description below or you can get a free audiobook

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Transcribed from video
How to Value a Product By BeatTheBush

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