No, it’s not market demands, strategic marketing, or economic predictions. The most important thing is much simpler than that: perspective.
Business is all about the trade of one object with another, and no, I’m not talking about barter. This is modern economy.
Suppose you bought a bottle of soda for $2 in a food court and paid for it. With that, you get a soda, while the person (or machine) serving you will take your $2 bill in exchange.
For you, or in your perspective, the soda is worth a tad more than the $2 you just gave, because you are willing to give it in exchange. If you thought it was worth less, you wouldn’t have ‘bartered’ the piece of paper for the soda.
On the other hand, for the person who sells it, the piece of paper you just gave is more valuable than the soda it has just given in return. From a business perspective this might be correct, as it costs less to manufacture than $2. But that’s not what you think, because you just can’t manufacture it for less.
The same thing applies to any money or value transfer that happens in the world. For your employer, for instance, it’s worth handing you (insert your monthly salary here) a month in exchange for your services to the department/company and the time you gave them, while you think the money is worth sacrificing your time for.
Everything else is based from this- market demands, stock trends, prices, economical situations, and everything business-related is based on what, in most people’s perspective, is worth how much.
Value is not a definite thing, even if there is a definite price tag upon it. This is because, beyond its standard value, which is what we pay it for, things also have a personal value, which is different from one person to another.
For example, the typical person would consider a can of soda worth much less than a dehydrated person in the middle of the Sahara would. Although the value is the same, the personal value of the dehydrated person on the soda is very high in comparison to the typical person. That person might even give a hundred dollars for it, which is something no typical person would do. But is that a terrible decision? He’s paying for much more than he should, but given the circumstances it is perfectly reasonable.
Let’s imagine your laptop to have been stolen by a thief who intends to sell it for $500. You can easily buy a new one of the same kind for $500, but instead of doing that you offer the thief $550 in exchange. Of course, the thief would consider it a good deal, since he gets more money, and anyway there’s nothing he can do with it. For you, it’s also a good idea, since, in your opinion, the data you keep in it is worth more than $50. For the thief, though, it’s worthless.
Personal value is created and kept in the same way as standard value: Demand. When we need something or there’s something we can do with it, personal value rises. However, it’s never the same for one person as it is for another, as the society is highly diverse.
There is no definite way to measure the true value of an object, since it’s different for everyone. If it’s all the same, then no sale would go ahead, and business would be as still as frozen ice. Why would I give something for something else if I think they’re worth the same? That’s a huge waste of time and energy.
Successful businesses run from this. They provide something with a much higher personal value for customers than for themselves. That’s what makes some things a huge hit and others a flop.
There’s nothing we can do to change the perspective of someone on an object, and with that said it is almost impossible for us to change their personal value on something. What we can do is to work around that to provide something of high value in others’ perspective in exchange for something of higher value in our perspective but less in theirs. That’s the key to business- understanding the society’s perspective.
About the author
Andrew Liongosari is a blogger in the Personal Development field dedicated to helping others grow and become the best that they can be. His blog, General Guides to Life, provides advice on optimizing your life potential and conscious continuous improvement through the hundreds of articles available on his site.