Ask people how much a gift cost, and they will tell you. Ask whether they still use it, and the answer has almost nothing to do with the price.
This is one of the best-documented findings in the economics of gift-giving. It is worth understanding properly. The popular version of the finding is wrong, and it leads people to give worse gifts, not better ones.
What the research actually found
The starting point is a 1993 paper by the economist Joel Waldfogel. He asked people to value the gifts they had received, and compared that with what had been spent on them. On average, people valued their gifts at less than they cost, by a clear margin.
The finding got a lot of attention, mostly in the form of "gifts are an economic waste, so give cash". That conclusion does not hold up against the counter-evidence, and the counter-evidence arrived quickly. A response paper pointed out that gifts carry sentimental value, which the original method did not measure. Once you include that value, a well-chosen gift can be worth more to someone than the money spent on it.
Both things are true at the same time, and together they say this:
A badly matched gift loses value. A well-matched gift adds value. The difference is not the amount spent. It is how well the gift fits the person.
Why price is such a weak signal
Money is the one part of a gift that needs no knowledge of the person. Anyone can spend more. Nobody can spend accurately without knowing something about the person. That is why the price of a gift and how well it suits someone are mostly unrelated.
There is a second reason, which more recent research has documented better. Givers and recipients care about different moments. Givers tend to focus on the moment of giving: the unwrapping, the reaction, and how impressive the gift looks as it comes out of the paper. Recipients care much more about the months that follow. Do they use it? Does it fit their life? Was it any good?
Expensive gifts are especially good at the first moment. They are no better at all at the months that follow. And the months that follow decide whether the gift is remembered as a good one.
Four things that predict it better than price
Specificity. Could this gift have been given to anyone, or only to this person? A gift that shows you know something particular about someone sends a message that no amount of money can copy.
Fit with how they actually live. Think about who they really are, not who they would like to be. Picture them on an ordinary Tuesday. Good intentions often go wrong with a gift bought for a version of someone that exists only in the giver's head.
Whether it fits into their home. Does it need storing? Displaying? Looking after? A gift that comes with duties attached is worth less than one without them, whatever it cost.
Whether it replaces something worse. An upgrade to something a person uses every day tends to do better than an extra item they use now and then. It is usually cheaper too.
None of these four is strongly linked to price. Two of them, fit and duties, are slightly negatively linked to price. That is because expensive gifts tend to be bigger and more permanent, and they need more space.
What this does not mean
It does not mean cheap gifts are better. It also does not mean effort can replace money. A thoughtful gift that is badly made is still badly made. A small handmade gift can go just as wrong as any other gift.
What it means is narrower and more useful: spending more does not improve a gift as much as you think. Say you have £40, and you wonder whether £80 would give a better result. The honest answer is that £80 gives you a more expensive result. The gift will be received only a little better. You would improve it much more by learning one more true thing about the person.
The practical consequence
Your budget is a real limit, and it is worth setting early. But once you have set it, put the rest of your effort into fit. Do not spend it looking for the biggest thing the budget will buy.
Fit is the harder problem. That is why most shopping is organised around the easier problem, which is price. Every online catalogue will happily sort products by price. None of them will sort by whether something suits your father.
Sorting by fit is what we built. Tell us about the person and set a budget. Then swipe through gifts chosen to suit them, within that budget. The money question is settled at the start, and your attention goes where it makes a difference.
Questions people ask
How to choose a gift for someone?
Start from the person, not the shop. Think about how they spend an ordinary week, what they already love, and what they would never buy for themselves. Then look for something that fits. Set your budget early. Spend the rest of your effort on fit, not on the biggest thing the budget will buy. A gift that suits them is better than a more expensive one that does not.