From an artistic perspective, I want to always be upgrading to more and better gear. Downgrades are bad! Side-grades can be good or bad--they depend on the capability or tone-color you are trying to acheive, but lots of times, saving a little more and buying on the high-end is much more satisfying! As an artist, I'm on a quest for the best--best gear for my money! I'm still learning about what constitues upgrades, side-grades, and downgrades, but I have lots of experience to draw from, to acheive the results I'm after, with the gear I have, in the here and now!
Today, my gear is good, but so are my ears! It took me a long time to realize what good sound and good performing gear was all about! With my ears tuned up properly, I can determine if something can be categorized as an upgrade/side-grade/downgrade, for my situation as an artist, and I can make good and informed purchases.
From a business perspective, downgrading might be the ticket . . . do you pay the electricity bill or hold on to a high-ticket compressor? On the other hand, upgrading to a single, big mic might be the draw your studio needs to compete! Upgrading the coffee or coffee maker or painting the walls a new color might be a great way to keep clients! In business, there are lots more to think about than just the gear!
For business, side-grades or downgrades are for increasing capability and for continuing the business until you can upgrade to better sound/performance/capability, assuming you want/need to upgrade. Whatever it takes to sustain the business is more important than using the best gear! So, for business, downgrades and side-grades can be just as important as upgrades!
For me and my business, since I didn't get paid for a couple of recent jobs I did, I'm just going to upgrade my gear, and charge more the next time! If they can't pay, screw 'em--they don't get to play! I think I'll upgrade the coffee, too--and more lava lamps! Eventually, I'll find clients that can pay! As I upgrade to better gear, my artist side will be pleased! I will learn about new gear and my skills will increase!
Hopefully, as an engineer, you are trying to improve your skills! Better gear really does make the job of tracking/mixing/mastering/whatever easier and much more enjoyable! Some low priced gear could be considered "better"! Only you can determine the definition of better gear!