What does value for money mean?

It is a frequently used term, but do we know the meaning? In short, it means that considering the value for money, we will get the best option for our money, or in other words, to well invest in something.

1. Why is it good to be a conscious customer?

Being a conscious buyer means different things. In the classic sense of consumer protection, the conscious consumer is aware of her/his rights, knows the value of the product, and informed about the quality and prices. Apart from that, the consumer can be environmentally conscious, only buying things that are really necessary. Taking into account, from what and how the product has been made, what kind of packaging it has, and from where it comes. 

If we try to avoid gathering unnecessary things, we have already taken steps towards conscious shopping. We put less burden on our planet and will be better for us financially too.

Value for money connects to this because we are focusing on choosing the best investing options - it is a waste to spend money on something that is not worth it. 

2. Cost approach vs. quality based

Value for money can be looked at from two different perspectives. The first is when we take prices as a base point. Consumer price includes production fees, and also the VAT added by the producer and the merchant. 

Let’s take a look at an example! The production fee of a product is 5 EUR, but the factory gives it for 10 EUR. The merchant also puts a 5 EUR margin on it, so the net price will change to 20 EUR. In some countries, VAT will also apply, so the price will rise even more.

Value for money can be counted by dividing the product’s net price (20 EUR) by the production fee (5 EUR). The result is 4. This is not a surprise as it is common knowledge that we are paying more for the products than their production costs. 

However, we are not always aware of these numbers. Not to mention that only considering this counting and not paying attention to the quality will leave us in a bad situation, buying something that has a good value for money but a very poor quality. 

Considering only the quality of the product is not very useful either. The main goal is still to get a good investment, so not to look for the cheapest product, but the one that has the best value. Choose the cheapest option only if you are definitely sure that you will get a good quality too. Many store chains build on this with their own branded products.

If we approach quality in terms of value for money, then saving is not the primary goal. Indirectly, we can save money in the long run, as now a larger investment saves us a lot smaller ones. 

3. Branded products are better?

We tend to prefer popular brands because we think that the quality will be perfect. There is some truth in this but we must be careful! A conscious buyer would not fall for good marketing: researches and then decides. Not only about the product, but also about the vendors, webshops, and store chains. 

Nowadays it is easy because there are loads of websites comparing the prices. We can find many product tests, there are some platforms where the products are recommended based on the customer reviews. If the value for money is important for us, a little research is essential before purchasing.

4. Value-based pricing

Pricing is tricky, for the vendor and the customer too. The price should reflect the true value of the product and meet the expectations of the buyer. If you are selling a quality product, take advantage, and explain first why your product is more than the others, then indicate the price. As a customer, try not to have always the cheap option, because it is possible that you will need to pay much more later!

Does it worth it to deal with the cheap ‘filling’ products when operating a webshop? It depends on the circumstances, during a slow period it would have benefits, but during fast, Black Friday days, for example, we would not recommend it. 

To sum up, the value for money will always include consciousness. If we purchase products that are high quality, we are not spending money, but investing it.