Spillin’ free wine, now my tux is ruined— Kanye West, Real Friends
Should you pay $12 for a bottle of water?
It felt wrong.
I woke up at the W Hotel in Austin, Texas and I was severely hungover.
The Fiji water was sitting there on the mini bar. It was $12. This was long before Covid-19 and the subsequent money-printing, so it was probably $20 in today’s money.
I knew that I could go downstairs and within five minutes be drinking a $2 bottle of water.
So, you could argue that it was objectively stupid for me to drink the Fiji water in the room. I was the sucker Marketing majors DREAM about in their strategic planning sessions.
However, at the time, if you would have given me the option of getting punched in the face or walking downstairs, I would have taken the punch.
So, for all intents and purposes, this was a big picture decision: Either drink the water now and possibly salvage the day OR avoid getting gouged by the hotel and waste an entire day.
There are two logical thoughts, but they depend on time preferences and whether we are thinking locally or globally.
Some housekeeping: By local, I mean the situation immediately in front of you. By global, I mean zooming out and considering larger strategic goals.
- The local thought is at the bottle of water level: This is an insulting ripoff, don’t buy it.
- The global thought is at the day level: Is a day of my life worth $12? The day is ruined if I wait too long to get water.
Money examples highlight why it can be tempting to only think locally.
I walk into Snappy Salads in Dallas for lunch and I see three of my clients. We chat for a minute and I mention I eat there regularly.
One says, “Man. Eating $12 salads every day?”
Me: Brandon, you own a private jet.
Him: It’s a salad.
He was talking at the local level: You can make your own salad at home for a few dollars.
- If you are eating out, what are you going to eat if you don’t eat the “overpriced” salad? Cheap, unhealthy fast food?
- To make a fresh, non-soggy salad takes work each morning.
Those avocados and cucumbers you bought Sunday are not lasting a whole week.
The global thought is: How much would I pay to solve lunch?
In other words, what is it worth to eliminate the labor and thinking that goes into it? Free that time up to do and think about other things.
Assuming we do this every work day, it comes out to about $3,000 a year.
Is it worth $3,000 a year to have a healthy, fresh lunch made for you on workdays?
Now, if you are just going to watch Netflix and scroll Instagram with that time, then maybe you make the salad.
But, what if you could you make more than $3,000 with the extra time?
The more I look, the more I see these type of situations — people clearly doing the right thing at the local level, at the expense of their bigger goals.
An Atlantic article called The Myth of Free Shipping talks about why this is tough for the frugally minded: Irrationally hating to pay for certain services demonstrates the economic principle known as “pain of paying,” a psychological discomfort that keeps people from completing purchases.
What Do Memories Cost?
I brought these ideas up with a bank executive recently and he told me a story.
His girlfriend and her daughter wanted to go to a Pink concert and it was $450 per ticket. He was not particularly interested in Pink and could not fathom paying $450 for a concert, let alone for someone he didn’t like.
He ended up buying two tickets for them and he stayed home.
However, in hindsight he wishes he would have been there because it would have been a great shared memory between the three of them and strengthened their relationship.
They haven’t gone to a concert since.
Is a concert worth $450 a ticket? Maybe, maybe not.
But if we reframe the question to: Would you pay $450 to be closer to the people you love, you would probably say Take my money!
As you guessed, I drank the water and I happily pay $12 for salads.
No relationship is worth going to a Pink concert, though.