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It does matter when a potential buyer will mentally juxtapose the cost of production with the price being charged. If the individual can reproduce the same valu
by ruswick 14y ago
It does matter when a potential buyer will mentally juxtapose the cost of production with the price being charged. If the individual can reproduce the same value at a lower cost by producing it themselves, they will likely do so. This is why business-to-developer commerce precludes price gouging: the developers can replicate your product if need be.
It's possible to wring a lot of money out of people or corporations that don't have the capacity to replicate your work by opining the virtues of yielded "value." It isn't possible to do that when selling to technical people. At that point, cost of production needs to be taken into account. This is also why soft features like polish and convenience become significant in differentiating products.
EDIT: Also, you never refute the argument in the original article decrying your stance because value is idiosyncratic.
- jacques_chester 14y ago> It does matter when a potential buyer will mentally juxtapose the cost of production with the price being charged. Such estimates are routinely utterly wrong. People underestimate the cost and difficulty of pretty much everything. The book I reference elsewhere includes an entire chapter on explaining value to customers. Not always useful or even possible (here we pass into the world of marketing, advertising and salesmanship). And yes, there is a market-clearing price which may be below what you want to make. Either you accept a lower profit or you do something else. That doesn't change the concept of charging for value vs charging for cost. However you seem skeptical about the idea of charging for value -- to the point of calling it "value", with what I presume are quote marks intended to convey sarcasm.