THE CONCEPT OF VALUE

People pay for Value. This point raises the question of how do we create value.

Every time we meet a need, solve a problem or create a solution, value is created.

Value is the difference between benefit and cost. When the benefit derived from the use of product or the reception of a service greatly outways the cost of acquiring the product or service, value is huge. On the other hand if the differnce is marginal then value diminishes and in some cases totally disappears.

Value can hardly be considered without an objective view of the benefit and cost of the experience.

Benefit is increased to the degree that a product or service improves the users performance or experience but can be undermined by cost. And cost isn't only financial in nature. Cost is the defined in terms of how much money is needed to acquire the product or service, delays, errors and effort. Cost generally reduces the value created.

In order for us to really creat value, we must focus on increase the benefits associated with our product or service and reduce the cost associated with acquiring that product or service.

DI