The LIP idea in 4 minutes — How to improve your life with smarter purchases

Every day thousands of new products are released. All of them fighting for our attention and very few worthy of it. The biggest companies with the largest marketing budget can yell at you the loudest to increase chances that you buy.

I do not consider myself a person that buys new things all the time but I find myself looking at the latest new gadgets before deciding that I don’t need them as they don’t add enough value to my life. In this short article I want to explore one simple idea: Life Improvement Points (LIP™)

Let me use an example throughout this article: Updates on smartphones year after year. There is a new iPhone almost every year. Is there enough improvement to justify buying a new one yearly? To answer this question I want to look at two views: The one from the sellers and the one of the buyers.

The Sellers View: “Buy my new product because…”

Sellers have to make you want their products. They will outline the features which are better than the features of their competition and which features are unique to their product. Look at some smartphone advertisement videos and you will see things like “bigger screen”, “better sound”, and “great performance”.

Basically, there are two points the seller can make:

1. They create a new feature that is unique. For example, their new phone can recognize your face to unlock it.
2. They improved something compared to their older or competitor’s products. For example, they improved the camera quality on their new phone.

Your job as the buyer is it to decide whether their points are enough to make you buy their product.

The Buyers View: “Why should I spend my $$$ on this?”

And here’s my major point of this article: You can decide whether to buy answering one simple question: “Will this product improve my life?”

Isn’t that all that counts? If you agree, it is actually rather easy to answer it and get “unblinded” by the sellers’ marketing material.

Let’s Compute Life Improvement Points

Scenario 1 — From 0 to 5,000

Imagine you don’t have a phone. I know it is hard, please still try. Now you can compute the LIPs for having a smartphone:

1. +3,000 for being able to call people from wherever you are. Amazing!
2. +1,000 for being able to take pictures without a separat digital camera. Sweet!
3. +800 for being able to use GPS in your car and find your way. Incredible!
4. …and you can keep going with all the new possibilities this new gadget allows you to do (+200 in total)

SUM = 5,000 LIPs

Obviously, you can adjust the number of points you want to assign to each new feature depending on your needs.

Scenario 2 — From 5,000 to 5,050

Now imagine you do have a smartphone and you are thinking about buying a new one. And this scenario is the one — when confronted with — you can gain plenty of value from deciding to purchase using the idea of LIPs.

Let us again look at how much our life is improved with an update on a phone.

1. +20 for a better camera. 12 megapixels instead of 8, big deal, I won’t see the difference anyway.
2. +20 for a bigger battery. That gives me juice for 1 more hour in the day. Yay.
3. +10 for a faster processor. Faster sounds good, not that my current phone is slow but sure, I take it.
4. +10 for a display with more vibrant colors. I like the word vibrant.
5. +0 for unlocking my phone with my face. I was totally fine with doing it with my finger.
6. -10 no headphone jack. WTF?

SUM = 50 LIPs

Comparison of the Scenarios

In scenario 1, we went from no smartphone to smartphone. Let’s say we spent $500 on it. Since we did not have a phone, we got plenty of value for it: 5,000 LIPs. That is 10 LIPs per dollar!

In scenario 2 we went from our old smartphone to a new smartphone. Let’s say we also spent $500 on it. Since we had a phone and all of its benefits already, we did not get so much more value out of it: 50 LIPs. That is only 0.1 LIPs per dollar :(

I’m not saying don’t by the new product, but this framework gives you a number that actually matters and is based on features that matter to your life. Especially, now that you can compare with what else you could do with the $500 you would spend on a product that gives you few LIPs. $500 could get you started on learning a new skill which gives you more LIPs or buy an autonomous vacuum robot which saves you time and improves your life.

Life Improvement Points in relation to money spent

Conclusion

Think about how much value you get out of a purchase. There are always alternative ways to spend money with more “bang for the buck.”