I have quite a complex approach, and it applies across all my hobbies as well as for things like washing machines.
First, some things (power drills, washing machines, dishwashers) shoudl be treated as having a limited lifetime. Even the best won't last forever. I tend to buy the cheapest that has a decent specification/build quality to get performance and reasonable life without spending a fortune. I am rarely disappointed and sometimes pleasantly surprised.
Things like lathes and other workshop machinery can be expected to have very long lives, but I have to work to a budget. I seek a fundamentally sound machine that I can afford and that is amenable to both repair and upgrades.My mini-lathe falls into this category, very little fundamentally wrong or poor about it but worth doing things to it and far from worn out after nearly twenty years.
My mountain bike is in the same category. I bought the best I could afford, a mid-range bike with a good frame but modest accessories. All that remains of the original bike is the frame, cranks and possibly one wheel hub… but always an excellent bike.
Some things it's nice to have top notch stuff; it's great having a Mitutoyo caliper and various bits of M&W/Starret gear but perhaps its the pleasure in handling them rather than their actual performance that is noticeably better.
Cutters are disposable items; I would never pay a price that woudl leave me gutted when I break a cutter!
Sometimes you do need to make an investment. An Epson EcoTank printer costs four to five times as much as a cheap colour printer, but has tiny running costs and outstanding performance. My Nikon bridge camera cost as much as an entry-level Canon DSLR, but offers excellent results, full manual control and has a huge and very capable zoom lens. It means I can get top quality pictures anywhere without having to lug around (or buy) a bagful of lenses.
With musical instruments it's all different again. Price is meaningless – you have to try before you buy and get the instrument that works for you. Like machine tools, it's often how you use and set up the instrument that matters more than its innate quality. A good example is the Hohner headless bass, a cheaper wooden copy of the Steinberger carbon-fibre bass that costs several times as much, with licensed Steinberger hardware. Many musicians prefer the Hohner ones as they consider they sound and play better…
Other times, sitting back and studying the available options pays off. I have managed to get an incredibly capable telescope at a silly price by looking at what people were achieving with different scopes (and price points) and waiting for a good specimen to come up second hand from a reliable source (i.e. bought direct from an enthusiast).
I was able to review the Dremel 3D40 3D printer on loan. It didn't hiccough once and gave excellent results, but was restricted to PLA and wasn't really customisable. After reviewing the options it was clear the best option for me was a higher-end kit with better (UK-based) support and upgraded parts than the really cheap kits. It has had a few minor issues, but having made it, I can repair it without drama. My next 3D printer will probably be made from scratch.
So on the one hand I have an incredibly complicated approach, but in truth it's more about making a judgement about what I need and want from the object and also balancing to what extent it is a disposable purchase or something that I expect to maintain or even upgrade.
Neil