There is a mitzva to beautify mitzvot, as it is written, “This is my God, and I will glorify Him (ve-anvehu)” (Shemot 15:2), which the Sages expound to mean: “Beautify (hitna’eh) yourself before Him through mitzvot: Make a beautiful (na’ah) sukka, a beautiful (na’eh) lulav, a beautiful shofar, and quality tzitzit. Have a beautiful Torah scroll, written for the sake of heaven by a skilled scribe using quality ink and a quality quill, and wrap it in a beautiful silk covering” (Shabbat 133b). Along these lines, we find that God accepted the offering of Hevel, who brought his best and fattest sheep, while He did not accept Kayin’s stingy offering of simple fruits and vegetables (Bereshit 4:3-5; MT, Laws of Altar Prohibitions 7:10-11).
Our Sages tell us that in order to beautify a mitzva, one should be prepared to spend up to a third over and above the basic price of the item (Bava Kamma 9a). For example, if one went to the market and found kosher lulavim at different prices, it is a mitzva for him to add a third to the price of the simplest lulav in order to buy a nicer one. If he wishes to further beautify the mitzva by spending even more for an even better lulav, God will reward him. This is on condition that the additional spending will not be at the expense of his fulfilling other, more important mitzvot or of his ability to pay his bills or provide for his household.
So, if one has three possible lulav sets to buy – a kosher set that costs $30, a nicer set for $40, and an even nicer set for $50, the mitzva to beautify requires him to add a third (i.e., add $10 beyond the $30 price of the basic set) and buy the $40 set. If he wants to beautify the mitzva even more, he may buy the $50 set, and God will reward him.
This all applies to the average person. But for someone whose financial situation is precarious, there is no mitzva to add a third (Yam Shel Shlomo; MA; MB 656:6). Conversely, if one is fortunate enough to be wealthy, it is appropriate for him to pay more than an additional third to beautify the mitzvot. This is especially true of someone who generally buys expensive clothing and furniture and is prepared to pay several times the basic price of those items. He should be prepared to spend similarly on mitzvot.
If one bought a basic set and later has an opportunity to buy a better one, the mitzva of hidur requires him to buy it and pay more, but only if he can find someone to buy the basic set from him. Otherwise, he would ultimately be adding more than an extra third (Vilna Gaon based on Yerushalmi; MB 656:5; SHT ad loc. 2).