Friday, January 18, 2013

Value is perceived, not calculated.

How much does it cost?  What is it's value?  In a perfect world you might think that cost and value should be equal, but that's not how our minds work.  The saying, "One man's trash is another man's treasure," demonstrates that cost is only one facet of value.

How do we attribute value?  

Everyone attributes value to various items differently.  The circle above represents one possible value attribution, but the same person may attribute completely different value to two different items even if they perform the same job.  

Imagine an antique suitcase that one of your ancestors owned and used to immigrate to America.  An old wooden and leather box would be of no value as a suitcase today, but would still have significantly more value than a top of the line modern suitcase (assuming you are fond of your family and its history.)

The good news is that since value is perceived, it can be easily influenced.  While the "tricks" of increasing perceived value are highly customized to each individual product and company, at the end of the day it is just peace of mind.  Items of great value are easy to purchase at any price.

How can you give your customers peace of mind?