Comparative Index (IPI & IVI)

Why compare?

We compare because we want best value for our money!

It is also our nature to compare for a better selection, being it for survival of the fittest (Charles Darwin) or refinement of choices in a sub-selection process. As a whole, the whole population is a bell-shaped curve – called normal distribution curve. Thus, quick comparison will yield towards the extreme ends with vast differences while majority in the middle would have similar traits.

The art of comparison is challenging in the middle where one does not look too much different from the other. Like taking weight measurement as an example -most of us are of the similar weight. Only a few are too heavy or too thin. The vast majority of the same weight might not entirely have the same health status, some may be more healthy than the other. Thus, it is necessary to distinguish those with poorer health from those healthy ones to introduce health improvement measures. This calls for population studies and identifying distinguishable variables.

For properties, this is the same. Indeed, as the population grows to a huge number, selection or comparison becomes difficult. It is similar with selection and comparison of employee for a job to match making for a couple getting married. As the society becomes more sophisticated, public is blurred by the myriad of variables in a product or service. A clear example is mobile phones. They are of too many types, brand names, price range and functions.

Therefore, an individual’s preference (subject to bias expected) can be hard to determine. Yet, the free market is based on demand and supply, thus these preferences will determine the demand of the products or services. A smart consumer needs to understand what is value in the eyes of the masses.

Two items can be of the same price but of different value to different person. For example, two units of condominium may be of the same price (from developer), but there are differences in them due to a series of variables. These variables can be location, direction or facing, floor level or numbers of parking. An example is a unit of Condominium with price RM450,000 by Developer A is facing East, at Level 5 and comes with 2 car parks. Another unit can be similar price, size and same numbers of parking, but facing South and at Level 3A by Developer B.

If a decision is made by just price per square feet, both are similar. However, it is understood that they are definitely not similar in Value. Hence, the comparative index should reflect this difference.

The same principle can be applied to Vehicles. Selling price is affected by Total Mileage, Years of use (depreciation), Services & Maintenance, Type of Driver/heavy use or family use, etc. In this manner, a Inter-Vehicle-Index (IVI) can be arrived to cross compare between near similar vehicles.

THIS is the basis of our purpose to provide calculated indices for products (currently – Properties and Vehicles) or services. Our objective is to provide a clearer analysis on various variables to enable a single index to better compare among them. Different indices can be calculated for different perspective of the product or service. This way, hopefully it could assist in decision making for the users of this indices.

Translate »