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How exactly did you arrive at that conclusion? Why would a consumer product that I can get for $800 would be worth $100k for me, thus justifying overpaying for

How exactly did you arrive at that conclusion? Why would a consumer product that I can get for $800 would be worth $100k for me, thus justifying overpaying for it? Am I supposed to buy $50k wallet because I take it everywhere now? Or $250k glasses because I wear them all day?

Liron 5y ago
Good question, but I have a good answer: you need to understand the amount of consumer surplus of each product. If a wallet cost $50k, you wouldn’t buy it, you’d shove your credit cards in your pants pocket or find a workaround. But if a monitor cost $100k, you or your company would simply buy it and get on with your life - assuming you’re a professional programmer. Monitors have a ridiculous amount of consumer surplus. Once you accept that a monitor is worth $100k of consumer surplus, it’s more intuitive that a 10% noticeably better monitor can have 10% more consumer surplus, regardless of the low market price. And yes, strong vision correction is also potentially worth $250k if you make a programmer’s salary and that’s the only way you can work. It’s just important to operationalize “10% better” as a measure of how much it helps your output. If your productivity increases 10%, it’s worth an additional $25k cost. One more example: Imagine McDonald’s Big Mac Value Meals cost $1 each and every other meal cost $50. Assuming you make a $100k+ salary, I think you should opt for the $50 meals quite often, even though most of the country is eating Big Macs and thinking you must be crazy.
- bbbobbb 5y ago
  The hypotheticals make sense, but they're not reality. As for your last example, it again make sense on its own. In case of these monitors though, I see it more like every burger costs $10 but there is also $40 one that has a nice logo stamped on the bun. Also you have to pay extra for a plate. I don't think I am buying that one very often.

Liron 5y ago

Good question, but I have a good answer: you need to understand the amount of consumer surplus of each product. If a wallet cost $50k, you wouldn’t buy it, you’d shove your credit cards in your pants pocket or find a workaround. But if a monitor cost $100k, you or your company would simply buy it and get on with your life - assuming you’re a professional programmer. Monitors have a ridiculous amount of consumer surplus. Once you accept that a monitor is worth $100k of consumer surplus, it’s more intuitive that a 10% noticeably better monitor can have 10% more consumer surplus, regardless of the low market price. And yes, strong vision correction is also potentially worth $250k if you make a programmer’s salary and that’s the only way you can work. It’s just important to operationalize “10% better” as a measure of how much it helps your output. If your productivity increases 10%, it’s worth an additional $25k cost. One more example: Imagine McDonald’s Big Mac Value Meals cost $1 each and every other meal cost $50. Assuming you make a $100k+ salary, I think you should opt for the $50 meals quite often, even though most of the country is eating Big Macs and thinking you must be crazy.

bbbobbb 5y ago
The hypotheticals make sense, but they're not reality. As for your last example, it again make sense on its own. In case of these monitors though, I see it more like every burger costs $10 but there is also $40 one that has a nice logo stamped on the bun. Also you have to pay extra for a plate. I don't think I am buying that one very often.