What is Value?
Someone once told me that value is always more important than cost. This one saying has allowed my to open my eyes.
We are so accustomed to seeing numbers and prices attached to products all around us. This could be at the grocery store, online, etc.. Every product is associated with a number or cost. For example, food has a cost, but its value exceeds it greatly. By forcing a cost upon everything that we consume on a daily basis, we tend to lose sight of its value.
I am going to use WA as an example of this. Many people get scared away from the premium membership because of the cost. The Premium Membership, however, is a value that cannot be compared to the cost because of the massive amount of benefits. By thinking more about the value of product, we can be led to make better decisions.
Everyone has different perceptions of what value is. For an eccentric bowler, they may value going bowling at around $20. However, others (like me) may value the experience to be much less, around 5$. This leads to the question of how value is created. Costs are the same for everyone, but value differs among individuals. So, In relation to your website, it is important to target people that are going to value the products you are advertising as above the cost. This will lead you to higher conversions and higher customer satisfaction.
When the value of a product to a consumer exceeds the actual cost, they are more likely to purchase it. The gap between value and cost is defined as "marginal utility". For example, I would value a dinner date with my girlfriend at around $50. If the date only costs me $30, then I would have a marginal utility of $20. This gives me the mindset that I have actual gained 20$ in value from the experience.
For this reason, I typically give large tips to waiters. This can get very confusing because I value the satisfaction of others as well. Let me try to explain. If i value my date at $50, and the happiness of the waiter at $5, then if I spent $30, I would be happy to give a $15 tip. This would mean that I have spent $45 on an night that I would value at $55. My marginal utility would still be above 0 and I would still come home that night beyond satisfied (even though I spent more money than I should have if we were looking only at costs and not value). The larger the (positive) gap between value and cost, the larger the satisfaction will be.
Instead of thinking, "This product is so expensive that I do not want to buy it" think, "How much do I value this product in comparison to its cost".
I have become a much happier person by looking at value rather than stressing over the cost of products.
I hope this information will prove to be beneficial in both your daily life and the creation of your websites.
-Kyle
Recent Comments
2
Certainly does Kyle it is another way of explaining the benefits of a product. Thank you for sharing. :-))