Gift Value Ratio

Seneca wrote many books on the importance of gift giving. But what is the perfect gift? It should ideally be something needed by the receiver. And how much should it cost you?

     Many people do not like giving money as a gift. It seems slightly thoughtless. It is immediately apparent how much they value the other person. It shows no effort of thought. But I think this is unfair. There are few gifts more useful to the receiver or valued more highly than money – unless, perhaps, the receiver is so wealthy that he has no need of more.

     If you give cash as a gift the cost of the gift to you, the giver, and the value of its benefit to the receiver are the same. The value of the gift can be presented as a ratio – (value of gift to receiver)/(cost of gift). For cash this ratio will be 1. A gift that costs $20 to you is $20 benefit to the receiver.

     Let’s compare this value to other gifts. Sometimes people give gift vouchers for a store or chain of stores. In most cases these cost the same as their face value – a $20 voucher in a store costs $20. It also may cost you a little more if you had to go to the store specially to buy it. But how much is it worth to the receiver? If the receiver shops in the store regularly and spends much there it has the same value as cash, so gift value ratio is 1. But if the person never or seldom shops in the store, it is worth considerably less than 1. The receiver would have to make a special trip to the store and may end up buying something there that they would prefer to buy elsewhere for less. There is also a good chance that the voucher will never be used, or might expire, or the store might go out of business making the gift value ratio 0. The number of unused gifted store vouchers is considerable.

     Perhaps you can get a voucher with a gift value ratio greater than 1. If you pay less for the voucher than face value and it is for a store where the receiver often shops, the value is greater than 1 making it a high value gift. I am surprised that people do not demand a discount for vouchers. In many cases they expire unused. The receiver has to use them in that shop and may add to the voucher value with other money. They are a good business for the shop and I am surprised more shops do not discount them. 

     It is difficult to buy a gift and meet or exceed the gift ratio of 1. In many cases the person will not value the gift as much as it costs. If is it not something that the person would like to buy with their own money, it is not valuable gift. You would be better off giving cash. Or ask them what they want. You may prefer to give a surprise but the receiver would prefer to receive something they want.

     There are some cases where you can get a gift with a value higher than 1 and this is where thought comes in. If you travel often you may be able to buy gifts at duty free or in other countries cheaper than the receiver can buy them at home. You could buy smoking materials, food, drink, perfumes etc at a good price. If you know the brand will be to the liking of the receiver these gifts have a value greater than 1.

     Or perhaps you are a great shopper who finds bargains. You might finds something you know would be a great gift for someone at a good price. This shows that you are thinking about the person.

     A gift does not have to cost you money. Perhaps give the gift of time. If you can do a difficult task for a friend who is temporarily incapacitated, or mind their dog when they go on holiday or carry out a similar helpful task, this can cost you very little depending on how you value your time and be of considerable benefit to the receiver. Gifts such as this may have a value ratio well in excess of 1.

     So what do you give as a gift? Cash is always good. If you can think of something of greater value, so much the better. But resist the temptation to buy just anything. Be sure that the gift will be of greater value to the recipient than it costs you. If not cash is a more thoughtful gift.