An Insight a Day

No Such Thing as Overpaying

There were a few times in my life where it felt like I was being ripped off. For example, the time I overpaid (by more than 5 times!) for a pair of binoculars, or the time I paid a premium for the older model of a brand new laptop.

But looking back, was I really being ripped off? Maybe I wasn't, to be ripped off means being tricked and lied to. If someone was being honest while selling me something and I feel okay buying it at the asking price, even though I could get it much cheaper if I looked elsewhere or online, I'm not exactly getting ripped off. The seller was just doing his job and selling me stuff.

There's no such thing as a "correct" price for something, everything is based on supply and demand. Imagine being thirsty in the middle of a desert when someone comes up and offers to sell you a bottle of water for $100. Will you buy it? Or will you tell them it's overpriced and costs $1 at the supermarket? In which case, they'll probably tell you to go to the supermarket and buy it there yourself.

Another example, if you're in the market for a high-end gaming PC 10 years ago, it would have cost you a pretty penny. But fast forward to today, you wouldn't even buy that same PC at half price. So does it mean you would've overpaid if you bought it 10 years ago? No, because the supply and demand have changed. The supply of gaming PCs got better as technology advances, making previously high-end PCs less high-end by comparison, hence the demand for those older PCs drop.

Pricing is largely governed by supply and demand. If no one wants to buy it at a certain price, the price will drop. But if everyone wants to buy it, then the seller can choose whatever price he wants, as long as someone ends up buying.

At the end of the day, people buy stuff because they want the thing more than they want their money.