Many times after a purchase, we state, “That was a great deal” or, “ I got that for a great price.” However, what we really mean to say is, “I received an incredible value!” When you describe the product in terms of value, the price can vary and not be the only consideration. If price is the only consideration, you are dealing with a commodity. If you are in the business of buying or selling, you almost never want your good or service to be labeled as a “commodity” – you want to add value to ensure the purchase!
But how do you define the value of something?
When it comes to something tangible – say, your car, refrigerator, or a new pair of jeans – evaluating the “value” might be simpler. How much did it take out of your paycheck (price), and how long did it last before beginning to wear down (quality)? When it comes to these sorts of items, you can usually determine whether something was inherently valuable or not.
However, other intangible things may be more difficult to measure. How do you measure the value of things whose cost doesn’t necessarily involve dollar amounts, but rather your time, focus, and energy? How do you measure value of something that can’t be seen, but can rather be felt? For example, how valuable was the call you made to your childhood friend? How valuable was your afternoon run? How valuable was your coaching session?
I think whether you are evaluating a new blender or a talk with a mentor, the same principle applies. V=Q/P – Value equals Quality over Price. If quality goes up, value goes up; If price goes up, and quality stays the same, value goes down. If both quality and price go up proportionally, value stays the same – or vice versa. (Didn’t know you were going to get a high school algebra lesson here, did you?!).
This equation can apply to anything – just remember that price doesn’t need to be measured in currency! Try to remember this the next time you’re deciding whether to fit in that morning run, or deciding whether to upgrade your outdated phone. What is adding value to your life?