Leverage price and value, and you will make a perfect deal

 

Price and value are two words that many often mix in the wrong way. To start with, the two words describe completely different things. While price is a fixed tangible number, value is very much emotional.

The famous Warren Buffett quote explains it in a nutshell: 

“Price is what you pay; value is what you get.”

This Forbes article is focused on the price and value combination when it comes to the financial niche. However, it is valid for any industry.

Let’s play with the idea that you come across an ad offering a complete setup of your own business for $1,000. Is it cheap or expensive?

To answer the question, you need to dive into the value part. Here we will simulate two different profiles.

Person No.1:

  • A well-paid executive job
  • Many fringe benefits, like a free car, health insurances
  • An excellent development plan, aiming to become CEO within a few years
  • Flexible working hours
  • Seven weeks of vacation per year
  • Invited to become a shareholder of the company
  • You love your job 

 

Person No.2:

  • A job with a “reasonable” income
  • Working hours 9 to 5, five days a week
  • Must show up in the office daily
  • Stressful job depending on other’s performance
  • Two weeks of vacation per year to be duly coordinated
  • Do not like very much what you are doing, but you need the income

 

Price and Value Analysis

Price and Value AnalysisPerson No.1 would probably not pay much attention to the price, as he or she can easily afford the purchase. However, as loving what she or he is doing, the offer’s value is close to nothing. The chances to see this person as a customer are low unless the entrepreneurial mindset goes toward an extra business to develop.

Person No. 2 will view the situation from a completely different angle. The opportunity to leave the “hamster wheel” shows up as the primary trigger. To be able to work on your terms, when it comes to working hours and working place have a great value.

The freedom to take the business with you where ever you go is another value to add. Finally, the possibility to grow as a person and write your own paycheck is priceless.

For this person, the value is high. Even if $1,000 is an essential amount of money, the ideas start to spin on making the purchase.

 

Price matters

So, doesn’t price matter when the value is high? Of course, it does, and leverage between price and value must always be in place:

The examples exposed here are utterly opposite from each other for the sake of clarity in the discussion of price and value. There are a lot of different profiles between the two in the example.

The views of price and value are entirely different for these two persons. Even if the price isn’t a hurdle, person No.1 most probably won’t buy because there is no exciting value in the offer for his or her unique situation.

 

Value triggers

Instead, person No.2 will see a lot of value, as the product or service will solve a significant problem. The price is the hurdle to overcome! This person will probably find a way to afford the purchase, as the high value constantly promotes the action.

As you can notice, a price reduction will not change the level of interest for person No.1, as the value doesn’t exist or is superficial. With some sort of extra help on the price, it can be the reason to push the purchase button for person No.2. The high value is constantly “promoting” the purchase.

Where ever you place yourself on this price and value scale, Click here to nurture the value part of what a complete online business system and platform can give you. If you find a lot of value in an online business for you but need to figure out how to afford the price, you should Click here.

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Jan O. Nilsson –What is the Difference Between Price and Value?<==Go to the top of page

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