I just also want to note that people shouldn't ignore the psychological cost of paying. Making a decision on whether or not to spend money requires mental effort that doesn't scale down well with price.
Correct. I once pointed out to my friends who earns a five-digit salary every month (by no means impressive in the Bay Area) that he spent 20 minutes agonizing over a $2 payment. Before I pointed it out he didn't even realize it was irrational.
Also frugal habits learned from agonizing over $100 and $10,000 spending sometimes trickle down to those $2 decisions. It becomes an instinct even if it doesn't make sense.
