# Are our cars overpriced?



## jk330i (Aug 13, 2002)

Whenever I have friends ask me how much I paid for my 330i they get shocked when I tell them it is a $40k car.

Every single person who ask me think it's worth about $30-35k max, and they claim that 40k is too steep for our 'entry' level bimmers.
So it kinda gets to me in a way that I think about it and say to myself it probably isn't really worth all that money. :banghead:  

But then again, if a 330 were priced starting at $30+k (loaded w/options) then everyone would be driving one.

what do you guys think?


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## TedW (Jan 13, 2003)

jk330i said:


> Whenever I have friends ask me how much I paid for my 330i they get shocked when I tell them it is a $40k car.
> 
> Every single person who ask me think it's worth about $30-35k max, and they claim that 40k is too steep for our 'entry' level bimmers.
> So it kinda gets to me in a way that I think about it and say to myself it probably isn't really worth all that money. :banghead:
> ...


If you got a 325 you would be in the $30-$35k range. It's been my experience that most non-BMW drivers equate the price of a 3 series to be $30-$35k in general no matter what the model.

Ted


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## The HACK (Dec 19, 2001)

Does what other people think what you PAID for your car really matter that much? :dunno:

You're willing to shell out $40 large for the car, obviously it's worth it to you. Doesn't matter what other people think.:thumbdwn:


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## sshuit (Apr 15, 2002)

I would say that BMW's are overpriced. You don't get a lot of std equipment for the money, and the best value is in a 325i/330i stripper.

They can do that because they make some of the most fun to drive cars in the world and they know they can get away with it.

If all you care about is value, buy an Acura or a Lexus or an Infiniti.

You get much more "value" for money (leather / included standard features) and people will think you are a "smart shopper".

On the other hand if you want a car that puts a smile on your face every time you hit a set of curves, then stick with the bimmer. (Or maybe a P-car)



jk330i said:


> Whenever I have friends ask me how much I paid for my 330i they get shocked when I tell them it is a $40k car.
> 
> Every single person who ask me think it's worth about $30-35k max, and they claim that 40k is too steep for our 'entry' level bimmers.
> So it kinda gets to me in a way that I think about it and say to myself it probably isn't really worth all that money. :banghead:
> ...


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## AF (Dec 21, 2001)

I think all new cars are getting crazy in there prices . . . $40,000 is a little over-priced in comparison to our competitors but it is not outrangous or anything . . .


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## Kaz (Dec 21, 2001)

Considering a 325i comparably equipped to a 325i early in the E36 days cost about the same (I don't have the numbers in front of me but I can get them) in absolute dollars, and the price gap between it and the Japanese competition is much smaller than it used to be, I don't think they're overpriced at all.

And I actually get the opposite reaction from people when I tell em I paid $30k for mine.


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## Brashland (Nov 20, 2002)

I think they are, but you do end up paying more for a much more 'solid' car in addition to the prestige of it. Most people are shocked because you can get a brand new decked out Honda Accord low to mid 30's. When you buy a car that is similar size, regardless of make, people expect all cars in that genre to be pretty equitable.


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## drd_330i (Jul 14, 2003)

jk330i said:


> Every single person who ask me think it's worth about $30-35k max, and they claim that 40k is too steep for our 'entry' level bimmers.


I personally wouldn't consider the 330i an "entry level" vehical... the 325 is closer to that... but now with the 1 series comming out....

anyway I also paid $40K for my car.... and yes... it is overpriced by at least 5K (in my opinion)... but it's the car I liked the most... so I bought it. Becuase of people like us BMW will always be able to get away with this. I'm not upset that I think I may have spent more on this car than a comparable competetor... becuase from my impression... this is a superior car. but it would still be nice to pay less (free BMW's anyone  )


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## RKT BMR (Sep 7, 2002)

sshuit said:


> I would say that BMW's are overpriced. You don't get a lot of std equipment for the money, and the best value is in a 325i/330i stripper.
> 
> They can do that because they make some of the most fun to drive cars in the world and they know they can get away with it.
> 
> ...


Opinions like this always annoy me, primarily for their lack of understanding regarding "value". Sorry you had to be the whipping-boy this time around, sshuit.

What you say above is pretty nonsensical. In one sentence you say, "they make some of the most fun to drive cars in the world", and then go on to treat this as if it has no value. In fact, it has a lot of value to many people - arguably more than leather seats and other "standard features" that you refer to above. This is why people part with their $$ and buy BMWs, despite less competitive other features.

"Value" is a personal thing. It is always a mistake to judge another person's expression of what they value, as demonstrated by what they spend, through the filter of your own unique value set. There are plenty of people out there with the means to buy BMWs that do not value performance characteristics in cars, but instead value economy. They buy cheap cars.

Others place a premium on environmental impact. They buy a Toyota Prius, Honda Insight, or some gasoline SULEV.

Others have specific transportation and utility needs. They buy minivans and SUVs.

No one is "right" or "wrong" in any universal sense about the complex mosaic that comes together in their valuation decisions - they are, in the only meaningful sense, ALL "right".

As such, BMW isn't "getting away with" anything. They are serving a market, and satisfying customers.

That's a good thing, not sleazy as your statement implies. :tsk:


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## tommyd (Jul 8, 2003)

Expensive, yes... but all cars are really. Overpriced... i'd say thats a matter of opinion. It's funny but a lot of people think my car was much less MRSP than it really was... and are quite shocked at the price when they find out otherwise.

Sure there'll always be that naysayer who thinks you would have better spent your money on an Acura or some such (like maybe they did), but at the same time... i'll bet that they're secretly wishing that they weren't so "sensible" in their purchase...

I overpaid for my car... and it was worth every penny! :thumbup:


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## dlloyd1975 (Sep 8, 2002)

Kaz said:


> Considering a 325i comparably equipped to a 325i early in the E36 days cost about the same (I don't have the numbers in front of me but I can get them) in absolute dollars, and the price gap between it and the Japanese competition is much smaller than it used to be, I don't think they're overpriced at all.
> 
> And I actually get the opposite reaction from people when I tell em I paid $30k for mine.


Same here. I tell people that I paid $33,800 and they'll say something like "Oh, that's what a minivan or SUV costs." For that price, I can't think of another car that could beat the total package of performance, safety and a touch of luxury, unless you really need all that space or towing capacity. I think that for the money, the car is by no means inexpensive, but I think it's a pretty decent value.


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## RKT BMR (Sep 7, 2002)

sshuit said:


> You get much more "value" for money (leather / included standard features) and people will think you are a "smart shopper".


To reiterate my point a bit further, this too is a nonsensical statement... I got at least $50,000 of value from my purchase, otherwise I would not have made it.

I say "at least", as I would have probably paid a few thousand more, if that had been the price. IOW, I value the car I bought more than a $50k stack of cash.

I put this in even harsher terms: Anyone who would part with $X for thing Y but values the money more than Y is a moron. Only someone with serious mental instability or a sub-canine IQ will make such a completely irrational transaction.

For those of you interested in learning economics, this is how wealth is created simply by trading: Total wealth increases with each trade between parties, because both are recieving something that, in their valuation, is of greater value than that which they are giving up.

After the trade, both are richer.


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## RKT BMR (Sep 7, 2002)

dlloyd1975 said:


> Same here. I tell people that I paid $33,800 and they'll say something like "Oh, that's what a minivan or SUV costs." For that price, I can't think of another car that could beat the total package of performance, safety and a touch of luxury, unless you really need all that space or towing capacity. I think that for the money, the car is by no means inexpensive, but I think it's a pretty decent value.


And in the end, that's all that matters. The value of the car is simply that which you place on it.

When you bought it, both you and BMW became richer. You got something you value more than the money you parted with, so you are wealthier, and BMW got $$ in exchange exceeding what it cost to produce the vehicle, so they are richer.

This is how economic activity, under a free-market paradigm, creates wealth.


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## TedW (Jan 13, 2003)

RKT BMR said:


> And in the end, that's all that matters. The value of the car is simply that which you place on it.
> 
> When you bought it, both you and BMW became richer. You got something you value more than the money you parted with, so you are wealthier, and BMW got $$ in exchange exceeding what it cost to produce the vehicle, so they are richer.
> 
> This is how economic activity, under a free-market paradigm, creates wealth.


Well put. :thumbup:

Ted


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## Guest84 (Dec 21, 2001)

Do I think this car is overpriced? Nope! (And its kind of nice having something that everyone else and their dog is not driving, like Hondas! I swear those things breed like rats! and DON'T get me started on Chrysler Sebrings!!!  )


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## RKT BMR (Sep 7, 2002)

Ripsnort said:


> Do I think this car is overpriced? Nope!


Can people be found that do? Yup!

Does it matter at all? Nope!


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## dlloyd1975 (Sep 8, 2002)

Ripsnort said:


> Do I think this car is overpriced? Nope! (And its kind of nice having something that everyone else and their dog is not driving, like Hondas! I swear those things breed like rats! and DON'T get me started on Chrysler Sebrings!!!  )


Sebrings suck. On the other hand, I actually like Hondas. The interior is usually of a high quality, they rarely have any problems, and are just plain great all around cars. Honda is very much an engineering driven company like BMW, but their engineering is driven more towards value, durability, and efficiency. For people that need A to B appliances, Hondas are flat out the best cars out there for that.


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## marcelgood (Jan 24, 2003)

I'm always amazed how people in the US seem to judge the value of something based on its size. Bigger is not always better. Calling a 330, and a 325 for that matter, entry level is just plain uninformed. BMW comes from that other continent called Europe, where people have quite a different view on cars. Don't forget, BMW builds smaller cars that don't make it here and by smaller, I don't just mean the size of the chassis. There's a 3-er Compact, 316i, 318i, 320i. The 330 is at the top of the range, excluding the M3. The 330 is a luxury car in Europe and the price is accordingly. Even more so because of the lower gas mileage compared to a 316. I think you all know how expensive the fuel is in Europe. Not many people drive 330s over there, unless it has dramatically changed since I moved. Where I come from, the wealthier people drive BMWs, everybody else drives VWs or cheaper Japanese cars. Seeing 18/20 year olds in this country driving an M3 just breaks my heart, even worse if mom or dad pays for it. Whatever happened to working for your success? What are they gonna drive when they are 40? A tank?


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## Fuzzypuppy (May 1, 2003)

*Well*



Ripsnort said:


> (And its kind of nice having something that everyone else and their dog is not driving, like Hondas! I swear those things breed like rats! and DON'T get me started on Chrysler Sebrings!!!  )[/COLOR]


Good thing you don't live down here in California. Especially in Marina/Pac Heights San Francisco and Brentwood/Westwood/Hollywood LA, you can't throw a rock out your window without hitting a BMW.

In fact, speaking of everyone and their dog, I wouldn't be surprised if someone around here didn't have a 325 lying around reserved for their favorite Golden Retreiver. California... what a strange place. :tsk:


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## Technic (Jun 24, 2002)

jk330i said:


> Whenever I have friends ask me how much I paid for my 330i they get shocked when I tell them it is a $40k car.
> 
> Every single person who ask me think it's worth about $30-35k max, and they claim that 40k is too steep for our 'entry' level bimmers.
> So it kinda gets to me in a way that I think about it and say to myself it probably isn't really worth all that money. :banghead:
> ...


The only BMW vehicle that I think is seriously overpriced is the X5... $40,000+ _base MSRP_ for a manual transmission, no leather, no Xenon, no fancy stereo, no sun/moonroof, one of the smallest cargo bays, no-luxury-whatsoever-for-the-price-of-luxury SAV. But it sells...

I paid $39,200 for a 330i SP/PP/18"/X/Metallic, and I did not have any problem with that number; I could have spent the same amout of money in a Lincoln LS and see a 50% depreciation within the first year. I have a co-worker with a Ford Focus that always find a way of expressing that "he's never going to buy a car for that much". When I told him that there are Ford Explorers, F150's, Sierras and Silverados that sell for that much, he just shut the hell up...

The issue of value says more about ourselves than the merchandise that companies sell.


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## RKT BMR (Sep 7, 2002)

sshuit said:


> What about monopoly situations?... I can't get a beer from an outside vendor inside the ballpark so I have to suck it up and pay 6$... that still doesn't mean the beer is overpriced?


The answer here depends entirely on what one means by "overpriced".

Monopolies are market-distorting entities. That is, they impact the availability of goods and services, and the relative value that must be exchanged to obtain them. So there is a particular interpretation of "overpriced" that would be valid: If a good or service is more expensive with a monopoly than the same good/service would otherwise be in the presence of a competitive market, then in this sense it is "overpriced". That is a perfectly valid use of the term, however it has little to nothing to do with whether or not an individual, when it comes to obtaining the good/service, will judge the asking price "worth" / "not worth" it. The simple fact is, if, even under monopoly circumstances, a person pays the higher price (as compared to a competitive market) to obtain the good/service, they have demonstrated by their very actions that they judge it to be worth it, even if they would like a competitive market that would offer the same good/service at a lower price (who in their right mind wouldn't?  ).

Back to the beer example. The difference in price between 16 oz. of Bud from your local supermarket, and 16 oz. while attending a baseball game, is called a "premium" in economic terms. For sake of argument, let's say the former cost is $1, while the latter cost is $6. This means there is a $5 premium to have a beer at the ballgame.

So, it is only "overpriced" in an individual sense if you are unwilling to pay $5 to enjoy a beer while personally present at a live baseball game, in the stadium. The $5 here has nothing to do with the value of the beer itself -- for most people, 16 oz of Bud is 16 oz of Bud, so their valuation of this good is constant. However, enjoying beer at the game itself, while abstract, has value as well, and this is what you are judging when you decide to buy, or not, at the game. It has nothing to do with monopoly status or not. There are other scenarios that, for purposes of understand the theory, could also result in a $5 premium for the beer at the ballpark but have nothing to do with monopoly pricing advantage. It wouldn't change the underlying value judgement regarding the premium by the individual -- most people don't care nor consider what the source of the premium is when making a spot decision to purchase.

In my case, although I like beer, I don't value drinking it at a ballgame enough to pay the premium, so I don't buy beer there. Clearly many people value this differently than me, so there is no problem selling beer at ballgames.


> Or its only overpriced if I choose not to buy it?


You got it. I know it sounds simple, but that's really all there is to it.


> Economics = Voodoo mumbo jumbo.


Not really. Actually, economic misunderstanding is probably the most common example of people "trying to impose their values on others", as most people tend to project their value assessment of goods and services onto the public at large, tenaciously clinging to the fiction that objects and labor have some sort of intrinsic value separate from individual judgement, and that their own judgement just happens to coincide with that independent intrinsic value. In truth, this view, so commonly held, is deeply flawed and completely wrong.

Music has no value to most deaf people. Unsurprisingly, the vast majority of deaf people place little value on CDs, as to them they are just round, thin, plastic discs that really don't present much utility (if any) to them. Hence, it isn't surprising that deaf people don't shell out $15 bucks (or 10, or 5, or 1) for CDs. They aren't a part of that market. A deaf artist might place a small value on CDs for an art project, but that's about all I can think of. As such, they may be willing to pay something for a stack of CDs, but they'd be looking for unusable ones (i.e. can't be played) at bargain-basement prices, since playing them is meaningless to the purpose they plan to put them to. Since an unplayable CD is generally worthless to most hearing people, and most of the time simply gets thrown away, the deaf artist has the prospect of getting them for free, even though they might be willing to pay a nominal price for them. Bargain!

What's amazing to me is that so many people can read the paragraph above, agree with it, opine that it is totally obvious, and yet *still not get it* :rofl:


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## Motown328 (Jun 4, 2003)

> Music has no value to most deaf people. Unsurprisingly, the vast majority of deaf people place little value on CDs, as to them they are just round, thin, plastic discs that really don't present much utility (if any) to them. Hence, it isn't surprising that deaf people don't shell out $15 bucks (or 10, or 5, or 1) for CDs. They aren't a part of that market. A deaf artist might place a small value on CDs for an art project, but that's about all I can think of. As such, they may be willing to pay something for a stack of CDs, but they'd be looking for unusable ones (i.e. can't be played) at bargain-basement prices, since playing them is meaningless to the purpose they plan to put them to. Since an unplayable CD is generally worthless to most hearing people, and most of the time simply gets thrown away, the deaf artist has the prospect of getting them for free, even though they might be willing to pay a nominal price for them. Bargain!


Music has much value to deaf people as it massively affects the world around them and the world of the hearing....which, in turn, affects the world of deaf people. Just because it's out of hearing, doesn't mean it's out of mind.


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## RKT BMR (Sep 7, 2002)

Motown328 said:


> If the car was originally valued at $45,000 (buying price) and you turn around and sell it in a week at $40,000 (market value), it and you have lost $5,000. Simple, even though the auto is basically the same thing as it was on the lot a week ago......but not in society's eyes....it's been purchased, thus tainted, thus you lose money.


You're absolutely right in what you say above, however it is not the same as what you said previously.

The person in question above does indeed lose MONEY. It is not clear whether they have lost any VALUE, however. *Money* and *value* are not equivalent, interchangable things.

In fact, money in and of itself has very little value to the vast majority of people. The only reason it has value is becuase it is a proxy for real goods and services, and we all agree to honor that proxy. However, when you buy something with money you have earned, what you are actually doing is trading your labor (a service), for a good (the thing you are buying). While you may not be consciously aware of it, you have judged the value of your services (labor) represented by that money to be less valuable *to you* than the good you are purchasing.

Back to your example: While the person has lost money, they paradoxically have gained value and, at least in the moment, become wealthier. This is because there is something else of value to them that made it worth it to sell the car at a $ loss, and they have gained this in exchange.

After purchasing the car, they arguably had something of value to them that can be quantified as worth at least $45,000.

One week later, something presented itself to this person that made having the money, plus whatever that money enabled, more valuable than $45,000. For example, maybe he just found out that he has a $20,000 tax bill, due in a few days, or else he will suffer penalties, say 25% of the amount owed, or $5000. Further assume that the car is the most liquid asset this person has (let's say he drained his bank account to put 50% down on the car).

By selling the car, this guy can pay his tax bill on time, which has at least the value of $5000 to him. So he got $40k for the car, and saved $5000, which in total has a monetary value of $45,000.

However, there's more. The time, effort, and hassle associated with dealing with the late taxes also has value (or rather, a cost). This is tougher to quantify, but at a minimum bound can be put on it: The amount of time involved times his labor pay rate. The actual value is much higher, as the "cost" in dealing with something as aweful as this is certainly greater to this guy than what he earns per hour, but you get the point.

So, the bottom line is, by selling the car, he has gained greater value in return than the original $45k, discounted for fair use for a week. Another way of putting it is that he certainly would have been willing to pay $5,000 to solve this problem. That is the premium of the new situation he finds himself in.


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## RKT BMR (Sep 7, 2002)

Motown328 said:


> Music has much value to deaf people as it massively affects the world around them and the world of the hearing....which, in turn, affects the world of deaf people. Just because it's out of hearing, doesn't mean it's out of mind.


Patience, Dave, Patience! 

You apparently still don't get it, but you responded _precisely_ as I thought you would: Focusing on the least relevant aspect of the example, and ignoring the relevant parts. Is this because you can't understand these things?

I'll make it simpler: Do deaf people, generally, have large CD collections? If not, why not?

If you can answer that question, then you "get it". If not, well, I give up.

You've said you're a teacher, right?


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## RKT BMR (Sep 7, 2002)

Motown328 said:


> I think you are giving value to emotional issues.


Of course! You seem to be asserting that these things are "imaginary", while some other "thing" is concrete. This line of reasoning is easily dispensed with.

What is the "value" of a house? Why does an arguably equivalent house cost more if it is situated on the beach than one 1/4 mile inland? Please explain this without resorting to any "imaginary" emotional value. Try and do the same for two equivalent homes, one on a mountain ridge with a view, the other at the bottom of the canyon with no view. Again, since emotional considerations are "imaginary" with respect to value, you can not rely on any emotional factor in explaining the real-world difference in price.


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## adgrant (Aug 13, 2003)

*Before ordering my fifth BMW*

and third E46, I test drove some of the competitors and compared prices with the 325xi (the 330 is overpriced for me and the extra power is not too useful around NYC). Essential features for me were:
AWD : I live in the snow belt and have a long sloping gravel driveway with a curve.
Steptronic : wife can't drive stick.
Nav system : wife can't read a map and I really hate getting lost. 
Leather : No way I am sitting on sweaty plastic seats or even cloth in a 40k car.
Memory seats : swap cars with my wife frequently.

I test drove the G35 (more powerful but cost about the same and I hated the cheap looking interior), Audi A4 (the 3.0 was more expensive and I am not interested in a car with a turbocharged 4 cylinder engine), Jaguar X type (nice leather, smooth ride and a great nav system but cost almost as much as the BMW which it was inferior too in all other respects).

When comparing the costs of these cars I considered the lease residuals and lease financing charges. The G35 also did not have free maintence. My conclusion is that the BMW is not overpriced. Its value compared to any SUV including the X5 is irrelevent to me because I would never buy an SUV. I don't like how they drive and the 325xi handles the snow fine including unplowed driveways.

On a final note: I don't buy used either because I like to drive a car under warranty and with free maintence (the BMW dealer charges almost $100 an hour for labor around here) and finding a one year old car with the options I want would be next to impossible (325xis with NAV are not that common). With a three year residual better than 60% for the xi models, I don't think buying new is so expensive.


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## Motown328 (Jun 4, 2003)

RKT BMR,

Yeah, you know what, I think we both AGREE on the same issue, but I am confusing value and worth. I agree with what you are saying, but seem to be on the value track and you on the worth track.

ARGH! Non-visual communication makes it hard sometimes, eh?! Hahahaha.... :rofl:


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## Fuzzypuppy (May 1, 2003)

sshuit said:


> What about monopoly situations?... I can't get a beer from an outside vendor inside the ballpark so I have to suck it up and pay 6$... that still doesn't mean the beer is overpriced?
> 
> Or its only overpriced if I choose not to buy it?
> 
> Economics = Voodoo mumbo jumbo.


It doesn't matter. By definition, a product can only be overpriced if it fails to sell.

You buying a $6 beer makes it properly priced, because due to scarcity of supply you were willing to pay $6. You can't confuse being *expensive* (i.e. being more than what you wanted to pay or could purchase it for under other circumstances) with being _overpriced_ (which means you wouldn't buy it). Anything that results in a transaction is a "market", and thus both fair and efficiently priced.


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## adrian's bmw (Feb 14, 2003)

Fuzzypuppy said:


> It doesn't matter. By definition, a product can only be overpriced if it fails to sell.
> 
> You buying a $6 beer makes it properly priced, because due to scarcity of supply you were willing to pay $6. You can't confuse being *expensive* (i.e. being more than what you wanted to pay or could purchase it for under other circumstances) with being _overpriced_ (which means you wouldn't buy it). Anything that results in a transaction is a "market", and thus both fair and efficiently priced.


 :thumbup: Right on!!!! The same thing applies to cars. When M3's first came out, I was selling them for 15k over in the bay area. Overpriced...mmmmaybe. Overvalued because of market conditions- absolutely.


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