Value, why price is nothing but a number.
The first thing that comes to mind, anytime we go and buy a product is, what is the price of the good or service? How much does it cost? What is the worth of it? What is its value for us?
First things, first. Let us define the words we are using, so we have a common understanding on what we are working with.
Some definitions of Price, Cost and Value
1. Price is what you pay for goods or services you acquire; Cost is the amount of inputs incurred in producing a product and Value is what goods or services pay you i.e. worth.
2. Price and costs are calculated in numerical terms. Value can never be calculated in numbers.
3. Price and costs are the same for all the customers. Value varies from customer to customer.
4. Price refers to the money given to the seller for the product while cost involves the seller’s money to produce values. Cost can include labor, capital, materials, bills, salaries and wages of workers, and other transactions like marketing and distribution and shipping.
Understanding these differences can help you understand why the price of chicken and fries varies, from your local guy at the corner, to Hungry Lion and finally Curry2go. Why can Hungry Lion ask more for two portions of their bundle than your local guy? It all comes down to you, the customer and what you VALUE.
Value is the usefulness of any product to a customer; in other words, the value is what your customer believes the product or service is worth to them.
As you get to understand the meaning of these words and how they apply to you, you develop a greater appreciation to how as individuals, we differ in what we put value on, from spending K1,500 on an infinix Hot5 to someone else spending K18,000 on an iPhone 11. As long as whatever the iPhone 11 offers does not add value to your life on any level, you will always see it's price as a willful waste of resources. What gives Apple(the makers of the iPhone) the confidence to price it way above its competition? Well you can say it is determined by the cost that goes into the phones production, from inception to retail shelf. Costs that fall under a lot of categories, like components, advertising and awareness to the least known to most consumers R&D(Research and Development).
As you delve deeper into the what drives up the cost of the iPhone, you will be shocked to discover that it is mostly R&D, the department that adds or improves on the features the iPhone has that sets it apart from infinix Hot 5. This investment in research allows them to add features to the device that are beneficial to its end users, these users then end up pleased with what they spent money on and as such they see iPhone as something of value and as a whole, Apple as a brand. As long as they keep doing this, Apple can keep pricing their iPhones on flagship levels.
This applies to any business, and it is for this reason we used two examples of fast food outlets to electronics. Value can not be quantified in numerical value, you can be a billionaire but prefer to eat from your local guy by the corner because of simple things that add "VALUE" to the service, things like 1 on 1 interactions, the smiles you get, this very personal thing. As a service provider, your goal is to provide a service that makes your customer value your interactions with them, this way they do not look at price, as they see what you invest to give them that standard of experience. As a client, always know what is of value to you, this way, you will know what is worth spending your time and money on, and if in doubt, a little research never hurt anyone.