Not to nit pick, but that is basically a variation of ROI. Return on investment, or very similar at least.
Value is not necessarily a formula but a metric. Exactly what you described as benefits. I think that is the practically the same since perception of value is based on the benefits. And it is indeed all subjective perception.
To make it even more interesting, perceived value could be totally manipulated up while actual received (quantified) value goes down. That’s marketing. ;)
You’re not wrong! I think ROI would be the business side, while value is the consumer side.
In another response, someone told about a store that raised price on inexpensive mice, and they sold much more than when the price was lower.
My partner and I tried a new restaurant a couple days ago. He had fajitas, which was only something like $12. Normally, fajitas are more like $20. It was pretty good, not great, but something he’d eat again.
The cost was lower so even though the benefit (food quality) wasn’t as high as some places, the value was equal to what he gets at many other places.
But clearly value isn’t all, because next time he wants fajitas, he might decide he wants really good fajitas and go spend more. Or he might decide the cheaper ones are good enough to fill the craving and go there.
Anyway, perception is key here, and no one person can decide that for anyone else!
This, and the measurement of the perception of “value” needs to be taken into account.
I’ve been taught:
Costs can be price, time, energy, etc.
Benefits can be a physical product, an experience, a feature, or less tangible like peace of mind or security.
If you increase price, other costs must go down OR benefits must go up; otherwise value is lost.
And yes, it’s all perception. Benefits don’t affect all customers equally, and people place different value on their time, etc.
Your comment is spot on. I have just found this equation consistently holds up.
Not to nit pick, but that is basically a variation of ROI. Return on investment, or very similar at least.
Value is not necessarily a formula but a metric. Exactly what you described as benefits. I think that is the practically the same since perception of value is based on the benefits. And it is indeed all subjective perception.
To make it even more interesting, perceived value could be totally manipulated up while actual received (quantified) value goes down. That’s marketing. ;)
But yes, fun to theorize on this! :)
You’re not wrong! I think ROI would be the business side, while value is the consumer side.
In another response, someone told about a store that raised price on inexpensive mice, and they sold much more than when the price was lower.
My partner and I tried a new restaurant a couple days ago. He had fajitas, which was only something like $12. Normally, fajitas are more like $20. It was pretty good, not great, but something he’d eat again.
The cost was lower so even though the benefit (food quality) wasn’t as high as some places, the value was equal to what he gets at many other places.
But clearly value isn’t all, because next time he wants fajitas, he might decide he wants really good fajitas and go spend more. Or he might decide the cheaper ones are good enough to fill the craving and go there.
Anyway, perception is key here, and no one person can decide that for anyone else!