Valuation: Figuring Out How Much Something is Worth to You

How do we know if we're getting a good deal? Price tags are but an illusion. My definition of "good deal" is getting high-quality thingamabobs (usually clothing) as cheaply as possible (below market price), but knowing what "quality" is at what "market price" requires some research and decision-making. I'll just use clothing as an example since that's what I know best when it comes to shopping ;-P

The first step for clothing is to find a starting point for pricing. Let's use tops for an example because it's easy. How much is it for a plain, basic t-shirt? I'm not talking about higher end brands like James Perse or Three Dots--I'm talking about something from Forever 21, Gap, Old Navy, etc. Also, I'm not talking about straight-up retail--if we want to figure out the best deal at sales, we want to use the sale price for a t-shirt. I've seen plain t-shirts go for $5-6 retail, then drop to $3 at sales time.

Now that we've pegged the starting point, we can proceed with a "sliding scale" approach. How much would you pay for that t-shirt if there was less of it or more done to it? As a general rule, the price I'm willing to pay is directly proportional to the amount of skin covered: if it's a tank or cami, I'd pay less, and if it's a long-sleeved t-shirt, I'd pay a little more. However, there's a lot more beyond this general rule. This is where things start to get murky--you have to think about what you value about a piece of clothing.

For most women, fit is an important consideration, if not *the* make-or-break consideration. I'm willing to pay more for bottoms than I do for tops because it's really hard to find pants that fit perfectly. As for tops, I usually try to get basics for $5 or less, and $10-15 (sometimes $20) for fancier stuff. Yes, this includes designer clothing as well. I'm not so willing to pay too much for tops because it's easy to find one that fits well, especially when the fabric is stretchy. However, if the top is completely ill-fitting and I plan to wear it only to go to sleep or something, the dial on the sliding scale is going to move in the negative direction.

The type of fabric or embellishments is another factor in the equation. Even if a cami, in its basic state, is worth less than a t-shirt, it'll be worth more when it's a perfect fit and/or made of a luxurious material. The question is how much you value the added bells and whistles. In this heyday of e-commerce, you can easily do a survey of major online stores to see how much, say, a silk cami costs. If you come across a silk cami on sale, even better--you'll have a good idea of how much a silk cami is really worth. If it's not on sale, take the full retail price and adjust down a little.

Other factors, such as the rarity of what you want as well as how badly you want it, also figure into valuation. Naturally, if a particular type of designer shoes is available in rare quantities, it would be unrealistic to expect a 90% off price tag. As I said before, this is a really inexact science and most of us aren't trained as investment bankers (valuation *is* what they do), but a nebulous strategy for determining how much you're willing to pay for something is better than no guidance at all.