Price and value, two intertwined concepts. Or… are they?
Nowadays, people know the price of everything and the value of nothing — Oscar Wilde
We live in an age when we have almost everything ready at hand, displayed and offered to us, and usually with a price tag attached to it. Although we cannot put a fee on time, freedom, friendship, human relations, a pleasant work environment or meaningful experiences, we are often tempted to disregard all these for the promise of a bonus or an increased salary.
We are aware of the economic value of things, but disregard their intrinsic worth, usually sabotaging ourselves and our well-being in the process.
How is it made?
People generally know the price of a bread, a newspaper or a car, but have no idea about the actual manual labor put into making the bread, the extensive research and writing process involved in printing a newspaper or the intricate network of industries that have to collaborate in order to yield a single vehicle. So, can we really say that a baguette only costs fifty cents? Or should we rather think in terms of “it took time and people to sow and harvest the wheat, mill it into flour, knead the dough and then transport it to the little corner store or supermarket that I bought it from”? We tend to take things for granted and not spend one extra second thinking about the implications behind the monetary aspect of things.
One may look at a pet and think about the cost implications of caring for it, buying it food and toys and taking it to the vet, whereas another may only be focused on the joy and comfort that the pet will bring into their life. Or, on the other hand, one may buy a very expensive piece of furniture and turn it into firewood, since they do not know the actual price of it or the value of the workmanship put into creating that magnificent item.
Price vs. Value
In theory, the difference between “price” and “value” is a classical distinction in the philosophy of economics, issued by Adam Smith and developed by Marx. Thus, “exchange value”, which is the value I can get for a commodity when I exchange it for another commodity, opposes “use value”, which is the value something has in my everyday life, in terms of satisfying my needs and wants. The cost of a Netflix subscription in 3$, yet the value it brings into my life by offering me a multitude of movies and shows is immense.
In business, marketing people say that the criteria for something to be perceived by potential buyers as having a high “value for money” means being cheaper than the competition’s offering or providing “more” than the competition. Of course, in the real world, the perception of what makes up “value” is more subtle and a lot more subjective. Just by pricing your product less than the one sold by a competitor doesn’t mean that everyone will buy your product and no one will buy theirs. Why not? Because customers have their own rationale for why they will continue buying from him and not from you. Perhaps some people value the fact he offers more personal approaches or better customer services. In other words, price is what you pay for the commodity, whereas value is what you get from the commodity.
To truly understand Oscar Wilde’s saying, one should not try to analyze it in two separate halves, because they are interlinked. It is useless to know the monetary price of something and yet not fully understand its true “non-monetary value”. For example:
Cost vs. value of employees
We may know how much an employee’s salary will be, but we don’t truly know what “value” they can bring to the business.
Business income vs. value
In terms of customer service and turnover, it is not only about knowing the monetary value of new and existing customers; but it is equally important to establish the often unknown “non-monetary value”: will they be loyal, will they spread the word, will they recommend your products and services? Will they turn you into a genuine brand?
Build something that would last!
The goal of any individual and company should be to create something that doesn’t necessarily increase in price over time, but rather in value, because with value, cost is bound to go up anyway.
At TRISOFT, we believe we should build things that last, that are important and offer intrinsic meaning, for they will be things of importance in the future as well. It’s a process, not a single event, and we should strive to start it as soon as possible.