Can we put units of measure on value exchange?


Measuring intangible value is inherently problematic. Even the legal system experiences this dilemma. When a victim is granted compensation from a civil court, the judge must decide what amount of financial value is appropriate for their level of suffering – but how can suffering be quantified?

In a typical company/customer transaction, the business will receive a financial payment while the customer receives the value that your product or service provides. While the monetary value is easily quantified, the intangible value is more complex, and therefore difficult to apply figures to.

Some exchanges don’t, in the first instance, involve cash at all. A website might ask users to volunteer some personal information (often an email address, mobile number or home address) so that they can contact them in the future with information on offers. The exchange of information could be for potential discounts. For the business, the eventual value is to profit from the additional sales this technique could generate, and the customer can achieve value by saving money through a discount. The ‘fairness’ of this exchange is decided by the judgement of each party. It cannot be definitively measured, however, because the value of data or the value of an additional address on a mailing list cannot be clearly quantified.

The same can be said for researching. The physical act of information gathering is carried out in exchange for knowledge gain. Both are intangible; however, the value is much further down the line when decisions, plans, proposals and indeed sales campaigns can be crafted around the knowledge gained.

Simply identifying your value offering is inadequate as a basis for pricing. The product may save customers time – but how much time? How long will the product last? Are there any maintenance costs? Each of these questions impact their worth.

If the customer feels they’re not getting value worthy of the cost, they’re unlikely to buy at all. Considering pricing from a customer’s perspective and undertaking some research will allow you some idea of what a customer is generally willing to pay to obtain the value you’re offering.

Although value is extremely difficult to quantify, if you can explain its value relative to your price point, you are able to defend your pricing strategy.

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