I recently came across this discussion of price and value:
“If paying is equated with getting, you will set the price low but demand a high return. You will have forgotten, however, that to price is to value, so that your return is in proportion to your judgement of worth.
“If paying is associated with giving it cannot be perceived as loss, and the reciprocal relationship of giving and receiving will be recognized. The price will then be set high, because of the value of the return.
“The price for getting is to lose sight of value, making it inevitable that you will not value what you receive. Valuing it too little, you will not appreciate it and you will not want it.
“Never forget, then, that you set the value on what you receive, and price it by what you give.”
I’ll tell you at the end of this post where I found this, because the source astonished me, and I don’t want to bias readers against this perfect explanation of price and value by revealing the source right away.
Let’s parse this out and look at each piece.
If paying is equated with getting, you will set the price low but demand a high return. You will have forgotten, however, that to price is to value, so that your return is in proportion to your judgement of worth.
This part makes me think of playing the lottery. Each ticket is inconsequential in price, but with a potential for a huge payoff. Who wouldn’t take a chance?
Yet how many lottery winners quickly return to their pre-winning state of poverty? Only a few can make the adjustment to a new, higher level of wealth and their responsibilities to safeguard and nurture that wealth.
It also reminds me of a friend who received a life insurance payout many years ago. It was only $10,000, but in his eyes, a kingly sum. He was overcome with gratitude for this windfall and wanted to make amends for prior bad behavior. So he promised his friends extravagant gifts: a new car, a trip to Hawaii, and a down payment for a house.
In his grandiosity, he mentally spent that $10,000 many times over. Paralyzed by indecision, he returned to his old ways and squandered it on drink and drugs. Last I heard, he was living in a trailer in someone’s back yard.
Expecting a high rate of return for a low price severs the link between effort and payoff. If your commitment in terms of money, time, or work is low, your commitment to the outcome is also low. By setting the initial commitment too low, you have also judged the ultimate value too low.
If paying is associated with giving it cannot be perceived as loss, and the reciprocal relationship of giving and receiving will be recognized. The price will then be set high, because of the value of the return.
I love the notion of reciprocity here. Both sides receive something of value in this ideal exchange. The seller receives payment, which is more valuable to them than the goods or services they hand over to they buyer, and the buyer receives something they value more than the cash they relinquish to the seller.
For a seller of accounting services, the fees charged and the cash collected are clearly valuable. But what else could an accountant — or any other knowledge worker, for that matter — receive in exchange?
Every time we provide our expertise, we have the opportunity to enhance that expertise. A chance to learn something new, or to fine-tune one’s skills. To discover a new way of serving another that’s more effective or more efficient.
It’s also an opportunity to extend our expertise, our ideas, our knowledge out to the world. We all have unique skills and abilities. Those skills are not diminished each time they are shared. This is not a finite resource we’re tapping into. Our skills are increased every time we use them. We are only constrained in our ability to grow that expertise by our willingness to share it with others.
The price for getting is to lose sight of value, making it inevitable that you will not value what you receive. Valuing it too little, you will not appreciate it and you will not want it.
When we don’t pay much for something, or receive it as a gift, our tendency is to place less value on it than its true worth.
Recently, my step-daughter was in a car accident. Fortunately, she wasn’t hurt, and her children weren’t with her. But her new Camry was totaled. She was sideswiped when a young woman ran a red light with her parents’ new Lexus SUV. She tried to flee the scene, but the impact broke the front axle. This young woman was well-known to the police for her involvement in other car crashes.
Would this young woman perhaps have been driving a bit more cautiously had she earned the money to pay for that car herself?
Never forget, then, that you set the value on what you receive, and price it by what you give.
What are you willing to give up in exchange for something that matters deeply to you? As Peter Block writes in his thought-provoking book, The Answer to How is Yes, “What is most valuable cannot be purchased at a discount.”
When you think about your proudest accomplishments, aren’t these things that have required a substantial commitment of time and effort?
Where did I find this discussion of price and value? This passage comes from the spiritual text A Course in Miracles, Text-9. II. 10:1-11:1. A discussion of price and value was the last thing I expected to find there, and while the context was spiritual rather than commercial, I find it one of the clearest explanations I’ve come across. What do you think?