The Value of Value
When approaching pricing, businesses ask How much should we charge? When the question should be, How do we create value?
Or, my personal favorite, I want to raise my prices, which is seldom accompanied with a proposal for increase in value created for the business first and its consumer second.
In order for a business to realize profit, it is necessary to create value for itself first and its customer second. This requires an investigation into the cost structure of each value proposition, where most brands solely examine their revenue streams.
In our daily lives, we rarely think about the value of our spends. For example, we may purchase milk on a regular basis, more often than not from the same store. We pay what is asked and we use and consume the milk without much thought about value. We very rarely, if ever, will stop to consider the value the milk provides to us: Vitamin D, Calcium, and perhaps an enhanced cereal eating experience. Nor do we stop to consider what constitutes the price we pay, which is made of the farmer’s costs to procure and produce the milk and get it to the grocery store in addition to the grocer’s costs to have it on the shelf and sell it.
Thriving, profitable businesses create a business model that is centered in value propositions, not products or services. There is a very big difference. And by very big I mean commas in your paycheck big. It is necessary to study what goes into making a product or service and what it takes to get that product or service out to the world in order to create value for the brand first and the customer second.
When a brand switches their mindset from customer to revenue, and from product to problem solver, their whole game will change. The problem is that this approach requires a strategic conversation based on concrete facts and evidence, which is a place most businesses do not want to begin their journey. Brands often push to get the product on their social feeds without taking the time to fully explore how it creates value.
While it is true that we cannot get anywhere without starting somewhere, it is also true that growth occurs only when there are strategic structures and plans in place. Sure, unintended growth happens on occasion and a lucky few brands hit a mark in the right place at the right time. This kind of sudden growth is positive only if it is sustainable and sustainability requires intention.
In the simplest terms, if we set an intention in the morning to have a positive and productive mindset throughout the day, we do so with the intention of improving how we experience our day and how the people around us experience us experiencing our day. And we will structure our day and our mindset to reflect that intention.
If your brand sets an intention to create value for itself first and its customers second, it does so with the intention of enhancing its own experience by increasing revenue and then its customer experience by providing more value. The inception of the intention (for many new brands, this is the product or service) is not what creates value, living the intention (to enhance the customer experience) creates value.
It strikes me as strange that, in general, people lack an understanding of value, even those who have strong opinions about what constitutes an over priced item or a great deal. A deal is not a deal if it does not solve a problem or enhance an experience, no matter how inexpensive an item is. And overpriced is relative unless it is considered within the context of value and problem solving.
When a brand is able to switch its thinking from “I sell X” to “I create value for Y to solve this problem” (X= product, Y= customer), they place themselves on the path to profitability. This line of thinking opens up pathways to find the intrinsic value in a product or service, it offers an exploration into the problems consumers experience with their current options, and it can lead to additional revenue streams while keeping costs in line with overall brand strategy.