“When value exists, price doesn’t matter. Price is what we talk about in the absence of value.” ~ John A. Jenson
“I think it’s breaker #26. Right hand side, a couple up from the bottom.” My wife had called to tell me the air conditioning had stopped working and the temperature was pushing 90 degrees Fahrenheit inside the house and climbing. This happens periodically and is always just a breaker that’s tripped (it’s probably not a good sign that I know my breaker box by memory). Reset the breaker and cool air starts flowing from the vents again.
This time was different. No amount of fussing with the electrical system could get the air conditioning to kick on. It was a long, very uncomfortable night…
That was Wednesday. Thursday afternoon, the repair folks came out and said the a/c unit was done for and needed to be replaced. Did we want them to plan to come on Friday and get it done?
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In business we often talk about value – creating value, providing value, value, value, value – but it’s an abstract boardroom concept that gets all tangled up with words like satisfaction, quality, and price. We’re told we should never get emotionally attached when we buy houses or cars as individuals so we’re able to walk away if we can’t get the right price.
And in all of that is the challenge. Despite all of humanity’s evidence to the contrary, economists, accountants, and financial types often have the mistaken impression that us humans are rational. That we are always seeking the lowest price and greatest benefit from our money. That we are concerned about price. That we don’t make emotional decisions. That price = value.
But that seems incorrect. Here’s a better (oversimplified) formula:
Solution = Value.
The smaller the problem, the easier the solution, the less emotional attachment, the less value there is and the more price matters. The bigger the problem, the more difficult or imperative the solution, the more emotional attachment, the more value there is and the less price matters.
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Thursday afternoon at 4:50pm, needing to make a decision if we want them to fix the a/c on Friday. Sure we could do the rational thing, the thing that economists think we do, and get several quotes, study which air conditioning units are best, consider impact on resale value, etc. That would delay things well into the next week. We live in an area that (to me) feels like it is on the face of the sun for four months a year.
The quick discussion my wife and I had as we faced another sweltering night was: Can they make it work tomorrow? (yes) Can we afford it? (we will, regardless). Done.
John Jenson is right: when value (a solution to a significant problem) exists, price doesn’t matter. The bigger the problems you can solve and the better you can solve them, the less people worry about price.
Let’s spin this to HR/training, sales, or any business function: when people are worried about price it means: a) we aren’t providing enough value; or b) the customer doesn’t fully understand the value we provide.