Your question is a good one. It makes total sense to pay more if you are getting more. It tmakes no sense to pay more for less unless of course there is great personal value that you see in the item being purchased.
I like the square foot method of quantifying the value of property because it is an easy formula. But... and I am sure you expected a BUT based on the answers you have received so far. But, unfortunately the square foot method does not take into account many other factors such as location, improvements, and the personal value that you believe the home will offer you as an investment.
In Philadelphia, where I live and work, the square foot method is best used with condos or townhome communities where each property is similarly designed with similar sq footage and all property is within the same building or withing a small cluster. Even then, we still need to account for location (ex. penthouse or corner unit vs ground floor unit or basement unit) , upgrades, and the personal value tht the buyer places on the property (ex. a space w/ the potential for a guest room in the future vs a space with no room for growth).
I sold my mother's home in Richboro about a year ago. The community was built in 3 different phases over a period of 10-15 years so there were a variety of factors to take into consideration when pricing. Some of those considerations were: age, upgrades, lot size, square footage, additions, layout, location... Ultimately, to find the right listing price I took the comparable sales in the development, and evaluated the value of the upgrades and the value of improvements needed on the property. There was no formula. When an offer came in a few weeks later, we were confirmed that we had priced the home accurately.
The answers given below are very good. I would recommend finding a Realtor familiar with the area you are looking and going over the comparable property sales before making an offer.