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Tips, advice, and information for South African business owners

10 Oct

Value vs Price

For years I used to run in an old pair of takkies and endure agonising shin splints. When I wore them out to the point that they were literally falling apart, I finally decided to invest in a proper pair of running shoes. The cost felt exorbitant at the time, but that quickly dissipated when I ran pain-free for the first time.

Price and value are not the same thing. Something can cost much more (or less) than what it is worth.

So how much do your products or service cost? And how much are they worth?

Price is easy to communicate. It’s an absolute number that applies equally to everyone. However, value is far less obvious and rarely homogenous. For me, a quality pair of running shoes is a great comfort. But for others it can be a competitive advantage, a status symbol, or a luxury indulgence.

Many business owners make the mistake of assuming that people will know how much their products or services are worth. But this is rarely obvious, and most of us are too busy to figure it out. So, instead, we look for something that is obvious: price.

This is why so many small businesses end up competing on price, even though they offer a tremendous amount of value. That’s not a financially sustainable position so, inevitably, compromises get made in an effort to contain costs and bolster margins. Value is whittled away for the sake of survival until all that’s left is a depressing shell of mediocrity.

Focus less on price and more on value. There’s a world of difference between attaching a price tag and promising a lifetime of freedom from pain.

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