What Are You Willing to Pay Extra For?

I recently came across an article that suggested deciding what you are willing to pay for something before you even look at the price tag. This idea seems simple enough, and it could have some practical value. By asking yourself, "What is this worth to me?" as a first step, it's easier to determine whether you're willing to pay an item's asking price and if it fits into your budget.

How much we're willing to spend for a particular item or service is a very personal thing. It depends on so many factors--our income level, our lifestyle, our desires, and even our fears. And the fact is, most of us do make room in our budgets for special indulgences or premium-priced products and services because we've determined that, to us, they are worth the extra cost.

We recently asked Morningstar readers to tell us about some of the things they would willingly pony up extra dollars for. The responses we received were a patchwork, as you may imagine; however, there were some common threads. For one, many readers responded that they would pay extra for a quality, dependable insurance policy. Many others indicated that they would willingly pay extra for high-quality healthcare and food for their pets. Other top mentions were a good dining experience at a restaurant, and premium alcohol and coffee brands.

What follows is a summary of the responses. To read the full thread and weigh in yourself, please click here.

'I would pay extra for good insurance.' -- andymoler58 None of us knows what the future holds. How do we factor into our financial plan the likelihood of expensive treatments for a future illness and disability? Or high-cost damage or theft of our property? Because of this uncertainty, many readers said they would pay a premium for a "good" insurance policy—one that provides excellent coverage and is backed by a dependable carrier.

"I know my insurance company isn't the cheapest, but I have heard the horror stories of people struggling with claims at other companies," said dndhatcher. "Every time I have needed to make a claim, my company has been fair on the pricing and my agent has been helpful in going through the processing. I have used them for home, auto, and rental property insurance for over 30 years, and their track record of service has led me to not try to cost-cut by looking for a cheaper carrier in all that time."

"I pay extra for medical insurance that I can use throughout the U.S. and not just a limited HMO area, and insurance policies backed by companies that are well-funded," said seaside1.

Jomil said: "The premiums I pay are for insurance policies. Undoubtedly, I am paying extra for them given how expensive they seem to be."

"I despise my current employer-provided health insurance so much that I'm contemplating paying out-of-pocket to go back to Kaiser," said Carrie. "I haven't pulled the trigger yet, but open enrollment is right around the corner."

'We seek out higher-quality goods and services at a good price.' -- longameyes2 Many respondents were united in the philosophy that even when they splurge, they do it within reason. For some that also means having a discipline about where they splurge and where they are more likely to scrimp.

For instance, rforno wrote: "I tend to live and spend conservatively. But when I do indulge, it's on … peace of mind in things I find important or critical in life, whatever they might be--technology, a good car (given how much I drive to/from campus), or quality medical treatment."

Retired at 48 shared this "general rule": "Things that you do or use everyday...go first class. …You spend about 30% of every day sleeping. You should pay extra and own the best-quality bed and bedding, fit for you, that you can buy."

FD1000 said: "I bet that 90+% of people will not know the difference between $10-15 wine to $25-30. Consumer Reports have recommendation for great wines under $10. Same with electronics and appliances. I will spend extra to buy a reliable product, but the $2,000 TV is not twice as good as the $1,000 TV."

Many readers specifically mentioned vacationing. Within a vacation budget, there are certain areas where readers are more willing to bear higher costs.

"We will pay up for convenient and historic lodges in national parks and for renting nice beach houses or mountain condos, but not for ostentatious city hotels where something less expensive works just as well for us," said retiredgary.

ThePill said: "When hunting, hiking, or fishing I pay extra for a shower and shelter with a good bed. When out on the town with guest or friends I pay extra to have a safe ride home (Uber, limo). When vacationing I pay extra for a good meal and or taking a helicopter to a remote site as I am not sure if I will ever be back."

'I don't mind paying extra for stuff that actually tastes like something.' -- Dawgie Morningstar readers have discriminating palates, it seems. A good number mentioned that they would happily pay a premium for a flavorful experience.

"A really good meal out; a great wine; Ketel One," said mwleach.

"Almost Heaven beer from W.V.; great red wine; USDA prime rib-eye steak prepared to my liking; Ford F350 truck loaded up; fresh fish caught and cooked on a sand bar in the middle of the river; speckled trout on an open fire; a great education for my granddaughter," said Hobocon.

"Starbucks coffee and really good beer. I do not drink much beer but when I do I want to enjoy it," said johnep. "Also, DW and I usually go to a really fine restaurant two to four times a year. We have a tradition of a pre-Christmas meal at Ruth Chris with our son every year. We do not do that often but it is always very enjoyable."

"Allen Edmond shoes, pure maple syrup, and slow-poured draft Guinness," said Rathgar.

"When we go on vacation, there are certain restaurants that we go to out of long family tradition. We bear the costs not only because the food and service are excellent, but because eating there gives us a feeling of continuity, in a couple of cases going back a generation (30 to 50 years)," said Juris2.

'I have always spent more on my dogs.' -- gilvkona Many readers consider their pets a member of the family, and accordingly, don't skimp on care and food for their beloved companions.

"My cat. Every dollar I invest in him, I get great returns. Lots of cat love," said mlott1.

"I make sure [my dogs] get all the right shots and pills when necessary. And their food is 'good' with treats but not the absolute best. That's sort of what I do for myself," said gilvkona. "They have all been worth every penny for the joy they have brought to us."

"My dogs. Good food … and vet care," says pavlov.

Finally, on a humorous note, aubergine said: "I'd definitely pay extra for a self-driving dog. Current model still needs manual walks."