Value, Price and Cost – Not Always the Same

image courtesy of: http://www.saradaryl.com/

image courtesy of: http://www.saradaryl.com/

The Price and Cost of Value:

            In the process of bringing others into our dreams, we often end up taking the position of a salesperson. We are attempting to show the people we speak to the Value of what we have to offer, but what does that really mean? What is Value and how do we judge if we are succeeding at showing the Value of what we have to offer? First, we have to understand 3 key concepts about how people think about something when they are deciding if they should purchase it.

            First, we must understand Price. This is the simplest of the concept to keep in mind as it is something that everyone of us deals with on a daily basis. Price is simply the amount of money that is needed to get the product, good or service. It can be $1.79 for a loaf of bread.

            The second concept is Cost. Most people would look at you like you grew a second head when you told them that the Price of something and the Cost of something where very different things.  In our modern world, the most common usage of these words are the same, cost is price and price is cost, but that isn’t what we need to be thinking of. Cost is those intangible things that might occur if the person does or does not purchase the product. They are things like the security of knowing that you purchased something worthwhile (like being able to feed your family or take trips), or the amount of time that is required to fulfill the needs of what they have bought. A good example of cost can be seen in auto insurance. On the surface, every company offers pretty much the same thing at competitive prices, but the way that the companies handle a claim can be drastically different. The Cost of choosing one over the other might be the pain and trouble that is involved with dealing with a claim from one company to the next.

            The Last point is Value. This is simply the result when you add the price and cost together and subtract it from the benefits that the customer is getting from purchasing the product. It is a very subjective measurement since the benefits are going to be different from person to person as are the costs. The real key here is to show the benefits, the reasons that the products solves problems and improves the person’s life.  This will help make them comfortable with the Costs to minimize their impact. If you do these things, then the Value will be sufficient to have the customer buy your product or services.

            A good exercise here is to sit and think about your product, service or dream. What are some of the Costs that people might have in connection to it and how can you help to alleviate or reduce those Costs? What is the Value it offers?  How can you present these to people so that the value outweighs the cost?  Let me know some thoughts that you might have!

~Dominic

Life’s too Short to Have Bad Days! What are YOU doing to Make Today Fantastic?

 

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