Best things in world are NOT free

This car is 1972 built, still used in Kathmandu as a Taxi. If sold in Australia it will sell for nothing, but for the person who owns it, makes a living out of it.

A study into human perception of value & a lesson for a seller

“I so wish she can attend my mentorship session, but she can’t afford it” A well-known business leader (code named say… Beth) commented when I enquired about why her assistant has not attended any of the workshops conducted by Beth, so far.

That got me thinking. Was it an act of selfishness by Beth. It did not really cost any bit extra to Beth if she had put an extra chair in one of her workshops and allowed her assistant (code names say.. Ella) to be part of the workshop.

But then Beth is a lovely woman and so I wanted to think more about the whole phenomena and find a practical learning from this thinking. Don’t they say that best things in the world are free? or are they? After some morning deliberation on this subject, I totally came to believe that the opposite is true and I can confidently affirm that best things in this world are NOT free and they  SHOULD NOT be.

Nothing was ever free…

In days when Humans were either hunters or gatherers we had to make a serious effort for even the tiniest accomplishment be it food, water, cover or comfort. Mankind has progressed far beyond those days and now the availability of things that are necessary for survival like food, drink, and clothes are in abundance (except some very poor or war-torn zones). The human mind is much more potent now and has a much more free capacity that is required for just survival. That extra unused mind can get used in many different ways. Sometimes creation or sometimes destruction or accumulation. Some may just let it rot and fill their extra mind with time filling pursuits like over religiousness, games, drugs, and kink. Some use that extra capacity to explore (physically or mentally) landscapes or concepts and try to find something new. Some use that extra capacity to accumulate more and more just to be “Better than others” and then there are some that use their extra brain capacity to appreciate finer things like art, music, culture, and beauty. The concept of beauty, art, and culture does not exist in any other animal species except humans (though social instincts are present in many, as a necessity for survival). Similarly, concepts like Fashion and exclusive brands have evolved that is nothing but a product of that additional brain power and resources present within human civilization and that needs to be used in some way or another.

Nothing is free even now…

The idea for above discussion is to understand that the things that used to be necessary for our existence are so abundantly available that they are perceived to be free, though they are not. The ability to stand on a cliff edge and to be able to enjoy a sunset may seem like a free experience, but someone down the society is paying for this freedom of yours. Otherwise, as an animal, your mind would have been busy wondering about your survival or mating or finding food rather than looking for beauty in Sunrise or sunset or anything that is perceived as free beauty. A loaf of bread feels like such a mundane and cheap commodity nowadays, but ask a man who is lost in bushland without any food for 5 days. He will give his one arm to be able to eat that one load of bread. Even things like water and air and natural beauty that we perceive to be free are not really free. An unseen system perfected over centuries runs behind our backs to ensure that we are actually free to enjoy cleaner air, water and the beauty of sunset from that national park. If left to our own disposal we would be more worried about mozzies biting us and about gathering food for the evening that we would not have been free to enjoy the beauty of a sunset. That proves that even air, water, and natural beauty is not free. Most of us would not dare wander in the wilderness without the comfort of the knowledge that Rangers can come pick us up in their choppers if something wrong happens with us. And those Rangers and their choppers do not come free.

Human Perception of Value…

Philosophical discussion aside, I want to actually talk about an actual practical application of the concept. Let us first understand the difference between Cost and Value. Cost is something material that we pay to acquire something else of Value. The material thing that we pay can be money or effort. The something of value that we acquire can be a product or a service. This is called “value in exchange”. For different things, the value in exchange can be different depending on the brand, quality, newness, and usage. We also have to understand another concept called “Value in use”. This is the purpose of / or an actual need served by the produce or service that we bought. The “value in use” rarely has a linear relation with value in exchange, but on the other side the “value in exchange” has quite a linear relation with perceived value in exchange. Simply speaking most humans believe that if it is expensive, it must be good.

For example, when you buy a Brand New Lexus, just because you have paid a premium price to buy a luxury item, you give it extra care and love. On the other side when you buy a $2000 run down car, you may not value it as much as an expensive Lexus, though the value in use for both of them is the fact that they move you from one place to another.  But still, perception wise I value the Lexus much more. This shows that human gives more importance to the “Value in Exchange” in comparison to the Value in Use.  So if Value in Exchange i.e. Cost of procuring something is less, we naturally perceive that the value in use would be less too. Going further this also means that we do not value what is free.

A Lesson for the Seller…

If you are giving something which has a sizeable “Value in Use” then try to equate the “Value in Exchange” to the offering. In layman terms, If you are selling something or giving a service which is really valuable, price it accordingly and never sell it for cheap or free. No! you will not be doing any social service by giving it free or cheap because people will not value it, if the value in exchange is far less than the value in use.

The lesson to be learned: Give something of great value, believe in it and charge your premium price…

The what if: What is someone else is giving it cheaper or what if customers do not understand the actual value of my product or service? – if this is the case, then articulate the value properly, be persistent and use carefully produced media, use photos, videos and creative ways to make people understand but never undersell. That’s how brands are made, aren’t they?

 

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