Thinking About Value

Photo by Марьян Блан | @marjanblan on Unsplash

Value is in the eye of the beholder. That seems like a straightforward statement, but it’s a hard one to truly grasp.

There are certainly tangible criteria that can be applied to the price of a particular product or service - its material inputs, the resources applied to convert those materials into some sort of finished product, and the related overhead needed to make all of that happen.

But its value isn’t limited by the sum total of those costs (nor even the addition of some nominal, industry-stipulated margin on top). It’s actually determined by the market and the customer(s) who will actually derive benefit from it.

This benefit could be measured in terms of time saved, costs reduced or revenues generated. And if those benefits are material, then it’s entirely reasonable that the “price” of the product is determined as a percentage of that end benefit - independent of any relation between that price and the actual cost.

Certainly there are limits to this, and there should be, especially for specific types of products. But even where ethical considerations have been factored in, many sales folks (and I include the entrepreneurs acting in sales roles) don’t fully appreciate or consider the value aspect in their pricing. 

Instead, they belittle the idea, or they just don’t have the courage to implement it, to ask for it. If that’s the case, then I’d suggest that the problem isn’t the customer or the competition, it’s us. 

It’s our lack of belief in the product and the value it can actually deliver. We don’t have the conviction, we think the competition is stronger, and we basically think we don’t have what it takes. And, at some point, someone will figure this out - our customer and/or our competition - and they’ll take advantage of it.

If we really can’t deliver the value, then we need to start there. Our offering has to be on point.

But if the value proposition is there, then we need to get our head straight.

If we believe in what we have to offer, then we need to price accordingly. We’re always worth far more than we give ourselves credit for.