Lessons Learned: What is Value? Depends on how/when you look at it

So I spent a good deal of time thinking about value this weekend for a couple of reasons:

1. I had to spend way too much time in a vet hospital for my dog panic and cost/benefit never really entered my mind, but I did do some quick budget math out of financial diligence – couldn’t help it.

2. I need to find Guitar hero and I can’t.  But I did find out some guy paid $10,000 for one, not me though – cost/benefit entered my mind on this one.

3.  The dollar menu at McDonald’s – how are those items only worth $1?  I mean I like double cheeseburgers.

So I thought about it and realized that value is in the eye of the beholder or rather the coveter – but perhaps the marketer as well.   Not sure if value is ever the same or within banded limits at any point in time and this is the most confusing thing about value. Value is about the buyer, so as a marketer and product manager know how can you optimize the value or perceived value of your product.  Effective product placement can significantly change the value of something  – right channel, the right package, the right promotion….   Often the value of something is marketed and delivered to market based on a plan, so perhaps a double cheeseburger is only worth a $1, if [tag]share of wallet[/tag] is a key careabout.  Value is situational for both the buyer and seller.  So I’ve cut in a general overview from Wikipedia on Value for consideration:

The economic value of something is how much a desired object or condition is worth relative to other objects or conditions…

In [tag]neoclassical economics[/tag], the value of an object or service is often seen as nothing but the price it would bring in an open and competitive market. This is determined primarily by the demand for the object relative to supply. Many neoclassical economic theories equate the value of a commodity with its price, whether the market is competitive or not. As such, everything is seen as a commodity and if there is no market to set a price then there is no economic value.

In classical economics, the value of an object or condition is the amount of discomfort/labor saved through the consumption or use of an object or condition (Labor Theory of Value). Though exchange value is recognized, [tag]economic value[/tag] is not dependent on the existence of a market and price and value are not seen as equal.

In this tradition, to [tag]Steve Keen[/tag] “value” refers to “the innate worth of a commodity, which determines the normal (‘equilibrium’) ratio at which two commodities exchange.” To Keen and the tradition of David Ricardo, this corresponds to the classical concept of long-run cost-determined prices, what Adam Smith called “[tag]natural prices[/tag]” and [tag]Karl Marx[/tag] called “[tag]prices of production[/tag].” It is part of a cost-of-production theory of value and price. Ricardo, but not Keen, used a “labor theory of price” in which a commodity’s “innate worth” was the amount of labor needed to produce it.

In another classical tradition, [tag]Marx[/tag] distinguished between the “[tag]value in use[/tag]” (use-value, what a commodity provides to its buyer), “value” (the socially-necessary labour time it embodies), and “exchange value” (how much labor-time the sale of the commodity can claim, Smith’s “[tag]labor commanded[/tag]” value). By most interpretations of his labor theory of value, Marx, like Ricardo, developed a “[tag]labor theory of price[/tag]” where the point of analyzing value was to allow the calculation of relative prices. …

Value in the most basic sense can be referred to as “Real Value” or “Actual Value.” This is the measure of worth that is based purely on the utility derived from the consumption of a product or service. Utility derived value allows products or services to be measure on outcome instead of demand or supply theories that have the inherent ability to be manipulated.

Alas, value is subjective and may or may not have any relationship to production effort ([tag]cost plus[/tag]) or value in use.  The ever changing marketplace makes understanding your products value an ongoing and continuous thread of activity.

Sounds like this value thing is a continuous loop caused by an if-then-goto statement in the business plan.

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