Understand and Use the Value Formula

V = I/C

There it is. Keep it in mind.

Value equals the improvement in the customer’s desired outcome divided by the cost to the customer of achieving that improvement. Cost to the customers includes price, time, and energy. In other words, what money did the person pay plus how much time did the person have to put in in order to achieve the desired outcome plus how much energy did the person have to pour in to achieve the desired outcome.

Use that definition in screening every business decision you make.

First, is your product or service really helping the person to achieve what he or she wants to achieve, and if so, to what degree is it helping in that achievement?

Second, how much are you charging the person to commit to financially? Do you think your price is reasonable considering the improvement the other person is experiencing?

Third, how much time is the person having to invest in order to use your product or service?

Fourth, how much energy is the person having to pour out in order to use your product or service?

You can increase your value to other people by helping the other person to achieve better results in what he or she wants to achieve and by reducing the price, energy, and time they have to pour in to achieve that improvement. If you want to keep your prices the same or have them go up, then you need to impact the other aspects of the value formula in positive ways.

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