What is its value?

[yankees60]

I am looking at a record selling for $1.12 plus $5.00 shipping.

Is its value $1.12 or $6.12?

Suppose the same record is selling in a store for $1.00.

Does that make the value of the record $1.00?

Of course I'm going to have to invest a lot more time to going to the store to buy that record. Unless I'm already in the area and even more if I am buying multiple records, which then spreads my time costs over how many I buy.

There is, of course, some time investment in buying online but no more and usually much less than an in-person purchase.

Accounting is always historical cost based. In the case of the online purchase the cost (ignoring any sales taxes in both case) would be $6.12 while the in-store purchase would be $1.00. Unless this item was considered a form of inventory to be sold than there would be some additional costs added to it to apportion some portion of the business's overhead.

Does "What is its value?" rank with "What is truth?" and "What is reality"?

[Mark Leavy]

Price, cost and value are completely different things.

Price - cost = profit.
Value is in the eye of the beholder.

Reality and truth are fictions used to placate the simple minded.

[yankees60]

Price, cost and value are completely different things.

Price - cost = profit.
Value is in the eye of the beholder.

Reality and truth are fictions used to placate the simple minded.

How about a concrete value?

What is should be insured for for insurance purposes? Which value would the insurance company use to pay for a damaged item?

[Mark Leavy]

What is should be insured for for insurance purposes? Which value would the insurance company use to pay for a damaged item?

Depreciated Replacement Cost. But you know that already.
That has nothing to do with value.

[yankees60]

What is should be insured for for insurance purposes? Which value would the insurance company use to pay for a damaged item?

Depreciated Replacement Cost. But you know that already.
That has nothing to do with value.

Not if you buy, which I always do, replacement cost insurance.

"Replacement cost refers to the amount of money required to replace a piece of property when depreciation of the item's value is not taken into account. In the context of property insurance, replacement cost can dictate the amount an insurer will have to pay out to a policyholder to satisfy a claim."

Therefore it does come back to value.

In the case of a 1,000 record collection that was fully destroyed would the insurance company pay $1,000 (1,000 X $1 (store price)) or $6,000 (1,000 x $6 (online price including shipping))?

The answer to the question would determine how much insurance coverage one should buy.

Too bad we lost our insurance guy from this forum.

[yankees60]

Too bad we lost our insurance guy from this forum.

We had an insurance guy here? What was his username? Probably left because of the alt right loons denying covid. Anyone who works in risk mitigation understands the value of masks and vaccines.

I am fairly certain it was: "Insuranceguy"!

[yankees60]

Value is what you think you can sell it for

That is one way of looking at it. But if the intent is to keep it and you want it well-insured then the value is what it would cost you to replace it.

After asking the question here, thinking about it more, I'm coming down on the side that if I ever did have an insurance claim, I would use the values I found online (including their shipping costs) as that it would be what it would cost me to replace each one. I would vehemently argue with the insurance company that these would be their values.

Online has all the values for all the records. You could not find any store in the world that is selling all these records. Not even close. Additionally that would just the value that one store put on them. Finally, neither me or the insurance company is going to search out the store in the world that has the most of those records to document their values and then go there to find out their selling prices.

[yankees60]

That is one way of looking at it. But if the intent is to keep it and you want it well-insured then the value is what it would cost you to replace it.

If you think you can purchase something for a price that is lower than what you think it is worth, it just means that you are able to find a seller that is selling for below its value. If this was a fair and efficient market, then what you think you can sell it for and what you think you can buy it for would be the same.

What you are saying is true if buyer and seller and goods are all in the same location and able to be transported by the buyer him- or herself upon buying it. However, if the buyer and seller are in separate locations then part of the buyer's value is going to be the shipping costs component on top of the selling price.

Whenever I am buying anything and comparing prices I always need to compare total costs - item price, any sales taxes, shipping costs.

[yankees60]

A buyer’s additional cost (over other buyers) should not change what something is worth. If the seller of a prodict is actually far away from all buyers then ofcourse they factor in shipping costs into how much they can sell a product for.

Part of the price you paid goes to the shipper, it has nothing to do with the value of the item. Your cost of buying it went up not the value so you can’t say part of the value was in shipping because the value of that service is consumed.

I think all you say is basically true except that I'm focusing strictly on value from a buyer's point of view while acknowledging that the value / cost will be different from both the buyer's and seller's points of view.

If I am selling as you and others point out I don't realize any of the revenues from the shipping costs charged to the buyer. But from the buyer's point of view the shipping costs are a real component of the buyer's cost / value.

Let's say you or I has a $200,000 house as valued for real estate tax purposes and that is what someone will pay for it.

Is that its value? How do we factor in all the other costs that both buyer and seller are going to incur in the transaction? In each of them considering selling or buying are they each not going to come up with from the seller's point of view the net amount realized and from the buyer's point of view the net amount that has to be ultimately be paid out, which might be in the $210,000 to $225,000 range?