Sign In

The Law of Diminishing Returns: 10 Items That Lose Value the More You Spend

Some items just don't provide additional value over a certain price point. Here's why.
Published

There's an old adage that says, "You get what you pay for." But strangely, paying more doesn't always mean you get more. In many product categories, you're actually better off buying the cheaper version of an item. Depending on how you measure value, higher-priced items can actually be a big disappointment when compared against their bargain counterparts.

If you want to avoid diminishing returns on your next big purchase, we've rounded up 10 items that rarely provide a lot of added value over a certain price point.

Wine

Multiple studies have found that people can't tell the difference between cheap wine and the "good stuff." The New Yorker even points out that some wines from New Jersey were almost indistinguishable from premium French wines, even though the Jersey wines cost a mere 5% of the expensive French stuff.

There's another danger in overpaying for wine: risk of spoilage. You can even get into trouble when paying a premium price for old vintages. If the wine has been stored improperly, or just happens to be past its prime, then you've shelled out hundreds for a corked bottle that doesn't taste nearly as good as the $9 bottle you could have picked up at the supermarket.


Audio Equipment (Especially Audio Cables)

While some people say they can pick up on minute differences in sound quality, many consumers just can't hear the difference between "audiophile" headphones and cheap headphones. Why pay more for a difference that isn't audible to you? Let's be honest: A $39,000 speaker will give you serious luxury cred, but is it really going to give you as much "bang for your buck" as buying a new car or putting a down payment on a house?

And if speakers and headphones are bad, audio cables are an even worse culprit in the game of diminishing returns. Famous skeptic and TED Talk-giver James Randi famously offered a $1 million prize for anyone who could prove that a pair of $7,250 Pear Anjou audio cables were noticeably better than ordinary audio cables. Needless to say, the makers of those cables never did step up to earn the prize.


Medical Care

The health care system in the U.S. is complex, and fraught with confusing complications. Unlike almost everything else that Americans buy, health care services don't come with a simple price tag, and paying a higher bill doesn't necessarily mean you're getting a higher level of care. A recent article in The Dallas Morning News highlighted the fact that freestanding emergency room clinics often cost thousands of dollars to visit, while urgent-care center visits cost much less for the same treatment.


woman putting on makeup

Cosmetics

According to an article posted on Yahoo! Finance, the average markup on cosmetics is 78%. Most cosmetics are made from the same basic ingredients, so paying more money doesn't ensure you're actually getting a product that will last longer, be gentler on your skin, or have any other proven benefit. Elle has a great list of makeup artist-approved cosmetics that deliver great results at low prices.


man and woman running in snow

Athletic Apparel

While it's true that extreme athletes or marathoners may need to spend a little more to get the right gear, the average person who's just trying to be more active can make do with less expensive shoes and workout apparel. Are a pair of $128 Lululemon sweatpants really going to perform noticeably better during your yoga class than a pair of sweats you grabbed at Target?


Tech & Gadgets

These days, the latest smartphone or tech gadget has the same kind of luxury cachet as a great handbag or a designer suit. That being said, there's definitely a risk of diminishing returns when you start habitually buying the very latest device. You're probably buying a smartphone to use apps, and you don't need the latest flagship device to access your favorite ones. You can spend $70 or $700 on a smartphone, and still get pretty much the same app experience. Skipping a generation ensures that you're getting a good experience that provides more bang for your buck.


stack of folded jeans

Designer Jeans

Speaking of status symbols, having the right pair of designer jeans can definitely help you fit in with a certain crowd. But while they may often look or fit better, they aren't always as durable as "cheap" jeans. This Reddit post offers some good suggestions about finding that sweet spot between design and durability, so you don't overspend.


Handbags

I don't know about you guys, but I'm the kind of gal who routinely picks the cheap option in those "Splurge vs. Steal" fashion mag articles. It's not even about price, I just usually like the look of the less expensive bags more.

A handbag is a handbag. As long as it holds your belongings securely, and looks moderately nice, your basic needs are met. "But a real leather bag will last longer than a cheap bag made from faux leather," you say. Not necessarily so. For example, polyurethane leather is resistant to water damage. Real leather can stain when it gets wet.


Grocery Store Staples

Putting aside the relative merits of organic and free-range products that are ostensibly better for your body (and worse for your wallet), there are plenty of grocery store staples that are just as good as the name brands. Heck, sometimes they're even the exact same product, which makes paying more for the label just plain silly. HuffPost ran a great feature that used a taste test to identify the major brands behind favorite store-brand items at Trader Joe's.


keyboard airplane key

Airfare

Okay, some of you are probably going to disagree with me on this one. But if you ask me, at least when we're talking about short flights, there's not much difference between flying coach and flying business or first class. You're all on the same flight. You're all going to land at the same time. While the food might be slightly better in first class, it's still airplane food. And while there may be a little more legroom in the expensive seats, that's less important on short flights. And while early boarding is a real perk for some, others don't even see the point.

Sure, if you're flying from North America to Australia or Asia, you probably want a few more amenities, but the increase in price from coach to first class isn't really warranted on short domestic flights. I priced out a trip from Boston to Dulles on United for next month; economy seats were $69, with first-class tickets starting at $168. Is your flight experience in first class really going to be 143% better for the mere two hours you're in the air?

Readers, what items do you think decrease in value over a certain price point? What products are really worth splurging on? Tell us all what you think in the comments section below!


Contributing Writer

Tucker Cummings is a freelance writer based in New England. She's also written for Yahoo! TV and Tapscape. Follow her on Twitter @tuckercummings on Twitter for her musings on tech, TV, writing, and current events.
DealNews may be compensated by companies mentioned in this article. Unless marked as a "Sponsored Deal," the opinions expressed here are those of the author and have not been reviewed or endorsed by the companies mentioned. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
You might also like
Leave a comment!

or Register
21 comments
Topher
Ok, gang, before you jump in and say "she's way off", let's remember the title of the article: "The Law of Diminishing Returns: 10 Items That Lose Value the More You Spend:
Some items just don't provide additional value over a certain price point. Here's why."

She's not saying you should buy cheap, she's saying there's a point the quality doesn't increase in proportion to the price. And she's right, although I'd argue that goes for almost everything.

For example, is there a difference between $20 earbuds and $800 studio headphones? Of course there is. An enormous one. But no one is going to wear $800 studio headphones while they run. Spending $100 may get you earbuds that sound significantly better than spending $10, but spending $500 may barely sound better than the $100 ones. And, audio tests confirm that higher price doesn't always get you better sound.

Like everything, you will spend more for good quality in a product, but somtimes you'll spend even more for a brand name.
Mackintire
Agreed, you ARE way far off on the audio stuff.

Audio quality is only as good as your source material. So if you are listening to 64Kb/s MP3s, yeah
bikeral
you are way off on audio stuff. especially headphones and speakers. those are the two places where to a point spending more gets you more. pleas don'r confuse Beats headpjones with good headphones. Beats are over priced mediocre phones and those are not worth spending more on.
DABTPA
I agree that the law of diminishing returns pertains to audio cables, but the author is dead wrong on headphones. Where you start to loose being able to hear a difference in headphones is in the $1,500 range on up. I absolutely guarantee you can hear the difference between $50 phones and $200 ones. The question becomes is it worth the extra money TO YOU for that quality difference. I know a bit about this subject. I have 22 pair that range from $50 to $600. Each headphone has a different sound signature too.
dealnews-mbonebright (DealNews)
I'm 100% with you, Discount_Dan. Once you've made the switch to leather purses, there's really no going back. I opt for mid-tier designer bags that are about 2-3 seasons behind. Brand-new bag, excellent build quality, and usually 50% to 75% off.
Discount_Dan
Sorry, but I can't agree with the suggestion to buy fake leather purses: they look cheap to begin with and look like crap very quickly. I always buy real leather, but I make a point to avoid designer logos (not easy to do). For those that need the ego-boost that comes from carrying a designer bag (bought new or used), there is an active re-sale market. There is no such market for cheap, vinyl bags.
MadBiker
Cars! Diminishing return on your bucks!
Scroogus Maximus
Cheaper way to deal with flight delays: Pick your airports with a little more care, and your delay percentage drops like an airline sandwich gut-bomb. Flying to/from Dulles is a virtual lock for delays; flying out of/into Reagan cuts your delay time by a serious percentage. Seems strange, but adding a hop can also get you into the airport faster- flying direct to Baltimore takes longer than flying into Charlotte, NC, then hopping to Baltimore. It also puts you on a less busy concourse. The ultimate in delay avoidance, of course: Stay out of O'Hare. I'd fly through three hops to avoid the airport with the worst delay record on the planet!
ablang
I agree w/ you exactly about smartphones. I'm currently using one that's 3 generations back (Galaxy S3). It currently does everything I want it to (and still had 12GB of free space to install new apps when I got it).
Paula Bradley (DealNews)
chrismangan247 very interesting point about delays. I would never bother upgrading from Economy on a short haul flight, but considering the amount of times I've experienced a delay maybe I'll reconsider.
chrismangan247
I generally fly coach/economy, but the upgrade to first class is worth it if you're flying with bags (usually 2 included) and if you're going to be drinking alcohol on the plane (included), or want to watch a movie while you fly (included, again). the value is amplified if you get delayed on the flight. recently upgraded on a flight from NYC to CHI on a whim and it made a world of a difference as we waited 2 hours on the plane before we could take off. Worth. Every. Penny.
turkeydance
bottom line, i will pay more for a superior experience.
examples:
1. entertainment....HDTV/theatre/sporting events.
2. medical care.......brand-name meds/personal physician.
3. firearms..............classics with high collector interest.
i will not pay more for:
1. financial advice...well, only if the adviser is a billionaire.
2. education............4-year college/or certificates of training.
3. fashion................after 23, i was wasting my money.
Lindsay Sakraida (DealNews)
@akaRuth1e I also see your point on sports bras, but even still I don't need anything fancier than a Gap option. They make some pretty awesome "high impact" sports bras that'll get the job done, haha
Lindsay Sakraida (DealNews)
@akaRuth1e I agree to an extent... while cheap sweat pants or a ratty T-shirt might ultimately be uncomfortable if you're doing high-energy exercise with a lot of movement, there's still a line for me. I do spinning, and the fitted pants I get from Target are perfectly fine for me, there's no reason for me to get "designer" Lululemon pants. Shoes can definitely be an important thing to splurge on if you're running a lot and have specific concerns, but, as we noted in the writeup, we're mostly referring to the "average" active person who probably doesn't do long runs.
akaRuth1e
Disagree on athletic apparel e.g., shoes & sports bras. Cheap clothing may be okay for yoga, but those of us who log high mileage while sweating & bouncing pay more for quality. My favorite brands pinch less, fit better, and provide more support while lasting 5x longer than the flimsy stuff! That's true value.
Lindsay Sakraida (DealNews)
@brer_rabbit that's EXACTLY why I like it better, haha
Lindsay Sakraida (DealNews)
@brer_rabbit I actually think generic NyQuil is BETTER :)
Kupakai
So, in other words, you are saying for those that are too numb to notice the details (and it is true that the more attention to details there are, things get exponentially more expensive), don't waste your money on more expensive things because you are too numb to notice the difference anyway. Well, I can't disagree with that, I suppose.
joe1512
I would say Computers. The difference between a 1000 desktop with an i7, 8GB ram, SSD install disk, and good video card, vs a 2500 Alienware computer isn't THAT crucial. Who cares if you get 200FPS instead of 50?
nycdeals
@tahu300,

She is right. She mentioned "143% better" which is

$69 + (1.43* $69) ~ $168

better part = (1.43* $69) which is 143% of the cheap price ($69).
tahu300
For the final sentence, I think you meant 243% better since the first class seat was more than double the price of coach.
Enter to win $2,000