If it’s something practical that you actually use, like a bike or jacket, I generally think about how long I will have it and how much use it will get, and then see if it’s good value from that.
For instance I spent £800 on my Pompino (all second-hand parts), but I use it every day and have done for about a year and a half, so it’s good value. If I find I spend lots on something that doesn’t get used, I’ll sell it. I think it’s ok to spend more on something as long as it gets used.
Another thing to consider is sometime wanting things that won’t get used for their real purpose or to their full potential. For example I wouldn’t buy a huge expensive TV, because I don’t have a subscription TV service like Sky, a next gen games console, or a Blu Ray player. I bought a £10 Sony Trinitron which is fantastic for watching normal TV and playing Dreamcast.