Price vs Value

Welcome to the Wabi Sabi, the podcast around the art of imperfection. Today, we're going to be talking a great topic around price versus value. I think one of the key elements of any business and most people are listening to this has a business or runs business or wants to have a business at some point, we all come across this, this, this dilemma between price and what to charge and how much to charge. And really what we always focus on is like creating value. But I think there's this concept that I think we need to kind of mesh those two or have clear distinction between those two words and Mean and then figuring out exactly how to apply that so Jim. Let's get you kicked off about price versus value and what it means to you

Yeah, I think it's a very important topic because irrespective of what industry you're in, whether you're in, you know, a lot of our listeners or not have a background, come from healthcare. And so they will understand that you're delivering a service. Now, a really important distinction a lot of the time in these cases is the price someone pays is X, but the value they extract from that. If what you do, if you, what you help someone solve a problem or solution for, It has a multiplier benefit for them. The value that they experience, they see goes way over and above what they're paying for it. I've got a story about this and you know, I'll come back to it after we've probably expanded on this because it will just highlight just how much people perceive what it is that you actually help them for, what problem you solve for them goes way above what they pay for.

Well, I think we should start there. I think let's start with the story. I think that will probably create some context of where we're going to go with this and then describe it. And we'll go into detail of how price matters and how, what to charge and, and also, you know, the concept around creating value. I think sometimes there's a misconception around value. And I think there's also needs to be talk about the difference between our perception of value as the service provider, for example, or the product provider provider versus about the value that a.

Okay. Okay. Yep.

customer or prospect or buyer actually sees and that misconception can really screw up a lot of businesses in terms of communication and the transaction they want.

Okay. Okay. So, um, I've got two stories, but one of them is a longer story. So I'm going to go to the shorter one and it really highlights. It was kind of one of those scenarios where when you see, when you afterwards, you look at this and go, Holy smoke, this was a profound moment for me, really identifying value. So back when I was practicing, it would have been, gosh, 25 years ago. What I mean? Good 25 years ago. Um, I, I was practicing in country town and it would have been a. I don't know, Friday, it was a Friday, that's right. And Friday night, and I've got a phone call from someone and they said, listen, I'm really, you need to see a chiropractor, can you help me out? And I was due to go to a rotary meeting that night. And I was like, do I answer this call? My CA is gone, my assistant's gone. And I picked it up and this guy said, listen, I'm really desperate to see someone, can you help me out? And I went, sure, I'm just about to head out. And he goes, oh. I'll come in tomorrow. Where you coming in from? He goes, Lightning Ridge. Lightning Ridge is like three and a half hours away. So it's six o 'clock at night. And I've said to this guy, okay, I'll see you, but you got a long, because don't worry about me. I'm coming. Right. I'm bringing my family. And I said, look, I play cricket. I've got to be gone by 11. So the only time I could see is like 7 a .m. tomorrow morning. And he goes, I'm there. I went, wow. Okay. This guy's keen. So he had to drive three and a half hours to come and see me. He comes in and I saw him at that. 7am. And then I because I knew he was in town and driven so far, I go, listen, I'll come back again on Sunday. I'll see you on Sunday morning before you head off, you go home. And I saw him Saturday, then comes in Sunday, and the guy's crying. I'm like, wow, you know, that's, you know, occasionally that will happen because we made a big impact and help people. And but this one was different. So he said to me, he adjusted him to care of him. And, and then, and he goes, let me, let me fix up the account. He paid up what I thought, you know, what was due. And then he basically drops a thousand dollars on, on my counter. So this is back 25 years ago, right? A thousand dollar tip. And I've gone, wow, look, I'm, I'm really honored, but that's, you know, why are you, why are you doing that? You, there's, it's not necessary. I appreciate that. You shouldn't, but you know how I wasn't so much my own self -worth, but I was like, what's the story behind here? He goes, listen, I called a whole lot of car break.

Wow. Wow.

and no one said yes. When you said yes, I jumped in, brought my kid with me and he came, he came with me. He goes, now, Saturday night my kid went into an anaphylactic shock. And what happened was this kid, by going into an anaphylactic shock, had he stayed in Lightning Ridge, or he went into some kind of shock, all the duty, all the doctors were away that night, he would have been dead. He goes, so the ripple effect of you saying yes, meant that we got in a car, we drove, we did it, but we happened to be here with medical services, my kid would have been dead. So.

Wow. Hmm.

I can't thank you enough for just saying yes, because that was the ripple effect in there. So the price this guy had was, and it was after hours visits anyway, right? But he gave me an additional thousand dollar tip because of that, because the value of the saying yes had a ripple effect that saved his kid's life. And I've never forgotten what value is. I've got another massive one, but like, it's just going to take way too long for this context, but.

Wow. Yes. Hmm. Yeah. Wow, that's an incredible story.

It highlighted to me very early on what people pay and what people receive are totally different things.

Hmm. Well, that's exactly what we started the conversation with, right? We started talking about what your perception of value is usually quite different than the perception of value of, you know, the buyer or the prospect or, you know, the patient in this, in this manner. And sometimes it's like, we're so usually we hear stories more for the other way around. Whereas the person who's the service provider or the product provider feels that their value of their product is a lot higher than what people perceive it to be.

Mmm.

And then, but in this case, like I mean, man, like the perceived value of what you offer was probably high, mostly because you believe in yourself and your product and your services. But the buyer in this case, the patient, to them that value was a hundred times, you know, a thousand times X mostly because, you know, for them he dropping a thousand dollars probably didn't even do it justice because we're talking about a kid's life. And so it doesn't really matter anymore. And so I think. So what we got to understand, the takeaway I got from that is it's all about context, right? It's all about the contextual rationale for the value. And this is when the challenge is, is that we all go through this. I don't know about you, but I think we all go through this self -doubt around the value that we actually provide for people. Especially at the beginning of our careers or beginning of our business. Most of the time we undercharge what we think, mostly because we're not sure if anybody's gonna buy. And we're not sure about the value that we can provide. Is it going to change lives or is it going to be valuable to someone? And really this, this whole game that we play with ourselves around business is really comes down to one, do you value your product and services? Two, does it actually have an applicable value to, you know, whoever is going to, whoever is going to receive that value. And three, does the, does the person who's buying that product or service, will they perceive the same way? And oftentimes, like those three perceptions all have to kind of mesh into one to kind of to create this price point. I always kind of make this argument, not argument, but always talk about this with, you know, with a lot of chiropractors, specifically, or the people that I coach when it comes to business, what you need to understand in any business, by the way, what you need to understand, none of us, okay, none of us, and I will encourage, you know, the listeners and viewers kind of think about this. when have you ever paid for a product or service in your life that you valued less than the price you actually paid? Okay, I'll repeat that. Like when have you ever purchased something, right, product or service, that you paid, you decided to pay more than what it was actually worth? Now, at the time of purchase, that's the most important thing, before you actually made the transaction. And I would venture to guess, It's 100 % no, no one pays more than what it's worth to you at that time. Now, there's going to be arguments to say, Oh, I paid for this and it was willing to pay more. But see, you being willing means that you perceive the value to be a lot higher anyways. So therefore, what I'm talking about is no one decides to buy this water bottle, okay, or this, you know, air pod case.

So, yeah.

decide to go, it's worth $300 and you decide to go, you know what, I'm gonna feel like paying 400. No one does that, right? No one does that. Every product or brand or service that you provide is always equal value to what you think it's worth or less. And most likely is less. Why? Because everybody wants, there's no one who overpays. So therefore, what it really comes down to is that for a buyer, from the buyer's perspective,

Yep.

They're always gonna want some sort of discount in their mind that I'm willing to pay a thousand, 10 ,000, a hundred thousand, a million, whatever the price point is, because I'm willing to put that, because I believe the value that I'm buying or whatever the value I'm getting back is more than what I paid for.

You know, you're right because I'm really glad you started with the, the valuing yourself because a lot of the times we don't necessarily see the value that we bring to the equation unless we've, you know, you, you know, people value to the level you value yourself. And if you minimize what you do, then effectively you will be the mirror for what it is that other people will bring to you. But, but I think that a lot of the times it's.

Yes.

The gap is being able to demonstrate the value because in the absence of the demonstration, tangible demonstration of value, people by natural tendency will default to price. And so effectively, and this is one of the, I guess, the discussions that we always have is if people perceive your product or service as a commodity, then the only reference they have is price. No one will willingly or logically pay twice for the... twice the value of something when they know that it has a fixed price as a commodity. But the moment that you actually have like the whole fashion industry, the whole hair and beauty and makeup, you know, this haircut was done by this person. So consequently, we will charge five times that it's just the value. You know, the only time that I that when you're talking about no one willingly pays over the only the only deviations that I think is in a charity auction when you're actually raising money for someone and you've got people bidding against each other when they know it's a $50 item, but for bragging rights, they're going to go to 500. And so, but there's.

you see, but even in that case though, the extra that we would pay for, the extra is less than the bragging rights or the authority or the praise that that person's gonna receive in their mind. That's why they're willing to pay that. So even then, again, it all comes down to the perception of the buyer, right?

Yeah. Yeah. Yeah. So, and I think that the way, so perhaps we can look at some ways that people demonstrate value. So why would someone, like if we're positioning someone, and a lot of the work you and I both do is helping people become trusted advisors within their industry, whatever it is that they're focusing on. So.

Mm.

I guess how does someone become a trusted advisor and how do they demonstrate value to someone over and above what the perceived value of that protocol service is?

Yeah, so I feel like there's gonna be a couple things. So let's start with the first thing, what I talked about already is that you have to believe in your product or service. Because you because if you don't, like I said, we don't have to go into that we already talked about that. So there was number one. Number two is that so sorry, number one is basically believing your product and service that actually does what you think it does or will do what you think it does. So that it can actually create value on the other side. Number two, I think it's also important is that you actually have to know that. you have to be able to communicate that. That's the challenge, I think, where most people, it's not the value of the product or services, usually. It's usually the inability of people's inability to communicate that problem or communicate the value. That's where the challenge usually lies for most people when it comes to value stacking. I think the third thing, not that these are in any particular order, the third thing is actually be a good listener. As a seller of anything, you have to be... a really good listener to understand actually not a listener, listener and an understander to understand what does the prospect or the buyer is looking for that is valuable to them. So I always talk about and teach other people to think about is that you have to get inside the head of that person of your prospect in every aspect. Your job in marketing or sales is to really dive into the nightmare. of that prospect, meaning like, what are the fears and frustrations, wants and desires of that particular person so that you fully understand their worldview of a particular problem that your product or service actually solves. When you can understand it from their perspective, you then have a much better appreciation of the value your product can actually provide for that person.

Yep.

If you don't fully understand their position and only see it from your worldview, you're never going to be able to increase that value proposition to that prospect. So I think the key element here is what we talked about is understanding your product and service. Number two, ability to communicate. Number three is understanding the worldview of that particular buyer, because mine, to understand how does that product actually fits in? So which then ties into the communication because you can't communicate. something if you don't know that particular person's problem and how that actually solved. So in your case, like it didn't make sense that person dropping $1 ,000 tip to you. But once he explained the context, all of a sudden it's like, yeah, that makes sense. Right? Because now you understand from the world we know, I mean, in that case, you probably would have never guessed that that would ever have happened. Right? But once you understand it, it's like, oh, okay. That's a lot more easier to swallow to accept that. particular praise in that moment. Like it's not about the money, it's about the praise and the thought that was given to you and the acceptance of that, knowing the situation.

You know, something you, you, you said just then really made me think is like, had this been a thousand dollars tip that someone gave me and there wasn't that story, you know, that's a totally different proposition again, because it'd be like, okay, so, okay, how do you value a life? Well, it's, it's basically priceless. So a thousand dollars, you go, yeah, you can rationalize it, but if it was just a thousand dollar tip, then that would have left, led me into a totally different, um, narrative and story about myself and what I bring all those kinds of things. So I was just curious, just as you said that I went, that's something I hadn't considered, which was really, which was really interesting. So something that I, you know, whenever people in sales focus on the value things to comes to mind, a classic, a great reference of this is in Wolf of Wall Street. If, if you've watched it, when someone says, you know, without spoiler, sell me this pen.

Yes. Hmm.

Most people will focus on the features, but a lot of the times people in sales, the real ninjas go further. So the features of whatever it is that your product and service is what most people traditionally will talk about. It does this, it looks like this, it's this big, it does this. Where people go to the next level, which really solidifies the value, is talking about the benefits. And like you said perfectly, if you can get into the head,

Yes.

of someone and to understand what keeps them up at night, what's the most, the pressing problem in their life that you can solve. If you can link your product and services to the solution of that, you ethically have got a solution for them, you know, because people have this association about selling, which is like selling sleazy. It's only when your product and service doesn't match the needs of the client where there's a mismatch. But if they match them perfectly, you then go. I'm actually acting in good faith. I'm trying to help someone and I genuinely believe what I offer will solve that problem for the person. Now my job is to demonstrate the value to them for them to make a decision to engage with.

Yeah, yeah, absolutely. And the thing when you think about, you know, you talk about engagement when it comes to price and the values of what companies brings, what we're talking about is like, it's not just about, we got to talk about the perception, we got to take about the acceptance of what that means to that business and to that person. And what happens is that when you when you when everything's aligned, when when you can really get inside that person's head, and really start to stack, the value proposition to that person, they're gonna go, oh, like this is a no brainer, right? So this is what we talked about at the beginning, like if you're able to stack the value so much higher, that price point didn't change. But because the value is so high, this is at a much steeper discount now, right, to them, versus about at the time they had to be and they thought it was exactly the same price, right? So when we talk about value stacking, you don't have to change the price. Most people, what they do, okay, price versus value equal, right, for those people who are not watching this, if they're the same and equal, what ends up happening is that most, you know, one strategy is to discount, right? So you discount price, right? So that the value seems higher than the price. So if I went to a shop and it's like everything's 30 % off or 50 % off, yeah, that's a steal. It's a good deal, right? Because sometimes you don't even know, you don't even look at the price, it's like, oh, well, it's 50 % off, why wouldn't I take it, right? So then you buy, you wanna buy. So that's what they're hoping for. But the other way of doing something is to actually increase your value, right? When you can increase your value, your price point stays the same, but now you're stacking your values, but it's so much easier to keep the price as it is. This is what luxury brands does, right? If you think about luxury brands, they don't change their price. What they do is they keep their price high, but they increase the value stack so that it seems like it's at a discount. And that's why luxury brands, you're more, so many people are more willing to pay, right for, you know, high end luxury, not because of the materials better or because it looks better. It's because of status, right? They want the status, they want the feel the feeling of what other people think of them. Right? Like, I mean, from my understanding, I mean, I don't really know anything about cars, but like, say Ferrari or Lamborghini, it's like, it's not necessarily a better car than any other race car.

Yeah. Yeah.

it's just a better looking and very status symbol of you driving a Ferrari, right? And and so that's the important element. And going back to what you said earlier about, you know, selling features and benefits, if you think about the most profitable or most one of the top companies in the world at this at the moment is Apple. If you look at Apple as a brand, when have you ever seen an Apple ad that actually promotes its features? Every Apple ad is usually a montage of videos of someone using their product, doing amazing things with their product, right? It doesn't talk about how many gigabytes of memory it has. It doesn't talk about speed. It doesn't talk about what size of that monitor is. No, it just shows you how versatile, say, an iPad is, or how versatile a phone camera does, and how it shoots movies.

They don't, yeah.

doesn't give you statistics, you can research that on the online if you want to for the tech geeks. But the reality is they're showing you application. That's they're showing you the application because you are bought into the emotion. How many of you ever thought like looking at an iPhone, say filming of an iPhone and go and seeing that goes like, Oh my god, that's amazing. I want to get that phone because I can you they put you in a mode as if if you are the person who has that phone, you can shoot videos like that. But the reality is, right?

Yep.

You can, but you don't actually necessarily have the skills to actually make those shots. That's another story. But the Apple brand has taught you that, but you can though, because of the device. The only thing you're missing is the expertise and the skill behind it. So.

Yeah. Yep. Yep. Talent. But that was always the case with the kids when I played sport who just had all the goods, but couldn't play. And you hopefully you hope that I will just basically absorb it or I'll just infiltrate talent if I just surround myself with all these things. But fundamentally, it's you know what it is, is you're trading on emotion. You're trading on belief, hope, like at They're basically a lot of the aspirational brands really are that are that that's effectively the value they have because if you suddenly go I feel better about myself where I'm driving this wearing this We're using that staying here it level increases someone's what we call shadow values where they feel like you said more significant or status etc. And that's perceived value That's exactly what it is

Oh yeah. Like typical typical typical commercial, which I never understand is like luxury perfume. Okay, like if you want any luxury perfume, I don't understand those ads. Like it just doesn't it doesn't compute in my head. I'm like, I have no idea what that was even about. And you barely see like the actual product they're selling until the very end. And it's like usually some famous person good looking, and they're like doing these crazy things. And then it's like, you know, some X brand couture or whatever, right? And it's like, okay, Chanel number five. It's like, all right. And it's so unusual, but that's, they're not selling you like, doesn't tell you how much, you know, smell is going to be or this percentage of alcohol. It doesn't tell you that. No, no, it's selling all purely on emotion. And that maybe if I wore that clothing or wore that cologne, I might just feel as sexy as this person right now.

Yeah, yeah. Yeah. Yep, yep.

that's what they're selling you on is emotion. And so that's their value stacking, you know, for creating more value to justify their price.

Yep. I was funny. I was watching, it was a Jerry Seinfeld sitcom recently and, and he was talking about soda. He goes, you watch these people on the show, they're drinking soda, they're laughing, they're carrying on, they're at the beach and whatever. He goes, I'm drinking the same soda. I don't have those feelings. Maybe it's just the cup I'm drinking it out of. That's the problem. But that is the case in there. And so the value is, I guess it's selling someone. on a future version of themselves if they associate with their product and service, if the product and service. So that's effectively marketers and their genius is in there. Where do you remember from years ago, it hasn't been around for a long time, but remember the old MasterCard ads, they were sensational where they're, when you'll have the priceless one. And it's actually fundamentally true. Cause for people who haven't seen those, they were talking about, there was this whole campaign.

Oh yeah. Yeah. Priceless.

It's worth going and have a look at Googling because I know they're on there because I checked it a few months ago. But you know, you're, you know, a price of a meal, 40 bucks, you know, a price of a good pair of jeans, $80, you know, finding out that you're going to be a parent or whatever priceless. And so, and then the cat tag was everything has a price and for everything else, there's mastercard. So effectively it was trying to show you. that that was a solution to you having aspirations and dreams and hopes, et cetera. And it was highlighting perfectly the difference between the static nature of a price and the value of the product that's basically being sold.

Hmm. So I think I want to bring a little bit of wrinkle here. I actually actually I'll tell this story first and then then I'll come back to this thought I had around price and value in jobs. So I read I saw this video today. It's actually from Steve Jobs. It was an old video. And he talked about, you know, what is a brand and he defined brand is really just a comes down to trust. And he talked about, you know, a company. it really a brand or a brand is really like a bank account. And the more trust you provide, the more, you know, trust, meaning the more value you provide out into the marketplace, which, you know, the people are going to deposit, you know, money into that bank account. And that's the trust, like the building of that deposit is the trust that you're building. And that's the brand that you're trying to build. And when your product doesn't provide your withdrawing, you know, from that bank account. And obviously the brand, the value of a brand now it comes down to how much trust are you building, which is how much deposit people are putting in there versus about how much withdrawals you're taking away. And I think that's a really good analogy of how we need to kind of consider around business because business is a brand. You are a brand, everybody, you know, personal brands. And what we're really doing is how much value are we providing into the world? This is always how I feel about this. is that how much value do I provide into the world? And really what comes back to me is the exchange, which happens to be sometimes, most of the time, it's actually in price, in dollars, right? Or pounds or euros or whatever in that cash exchange. And that I always see money is really just an exchange of values that we're providing. And as long as I'm providing more value, as we mentioned at the beginning of this podcast, You know, I have no problem. I'm not going to think about the cash because really just will come because I'm providing value to the world. And sometimes it's directly and sometimes indirectly as we kind of mentioned. And we know one of the things that we were just chatting before there and we ran this event. And one of the events is we did, you know, Jim, you were, you know, single handedly, you know, created like, you know, we had 12 ,000 pounds worth of prizes from chiropractic leaders from all around the world for this donation raffle that we're, we're providing to. to the school in Scotland and You know, we were talking about how do we generate that and I was telling you about You know the sponsorship I had you know over seven thousand dollars seven thousand euros worth of sponsorship to go into this nonprofit paddle group, you know of members that we just kind of started and And how do we generate those? How do I can these are just money flowing in and all it was because of? One, it was relationships, we kind of nailed it down to like mostly about relationships. We didn't, we didn't make the ask at the beginning, we just built these relationships, you know, throughout our three years, sometimes, sometimes it's weeks, sometimes it's months, sometimes it's years. And when we built this religion, we built up that deposit, right? We're depositing within our brand, our personal brand, and there's just there's trust there. And when we build up that trust over time, you know, then we can make the ask. And when we can make the ask, of course, I'll do something for you, Jim, like you've been

Yep.

such a good friend, you've been to, you know, and those are the things that go a long way, you know, that we can, you know, that we have, but you have to work at it. But if you think transactionally all the time, you can't make the connection. There's no way you could have thought that that person you met, you know, I'll give you an example. When I went to the Super Bowl, right, and I went to, I was going to Las Vegas and I actually stayed with a friend whom I met from like eight years ago.

Yep. Yep.

We met at a conference and we just stayed in touch over the years. We'd probably seen each other maybe three times, maybe four times in the last eight years. And I just happened to see him like two weeks ago, like two weeks prior to the Super Bowl because he, I was in Arizona, he drove five hours to come and see me for five hours. That's it. Like he drove five hours to see me for five hours because that's all the time I had. But. I call him a friend, we connect once in a while, and that's the relationship we have. We have trust. Even though I don't see him on a regular basis, we built that trust and bond. And then it's reciprocal in many manners. I've helped him, he's helped me, and it's like that trust, that deposit is what we gotta work for. And I think really when we talked about value, I think it's really important that we don't always make value transactional. I think sometimes it's about creating value in other people's lives, not knowing, how this is gonna turn out and where this business or this transaction is gonna occur. If you just provide value because you care about human beings and build this relationship, I always feel like karma is always gonna come back to you.

Yeah. And I like what you basically said there, Lawrence, too, is that when we're focusing on one type of capital that people have is relational capital. And you've highlighted that strongly. And your wealth, a lot of times, is the quality of the relationships because, as you highlighted, we both had communications that were built on foundational principles of trust. They had to be there. You know, there's so many industries that, you know, the whole financial system. is underpinned by trust in terms of when you talk about an exchange of money or services, the trust is that this value underpinned by the currencies of the world will value and honor the value of one piece to the other. So whenever you have massive inflation and people don't have confidence in the currency, suddenly anarchy and chaos or rime. So you actually need that from a foundational principle, so which you highlighted. But it's actually really interesting that People develop trust in a brand. Like you said, they have expectations, et cetera. Quite a few years ago, Coca -Cola changed the whole New Coke and totally destabilized their loyal club and customer base who were used to a certain thing. I am, yeah. And then they went to New Cola and they tried to sell everybody on it. I'm just a student of history, actually. So...

Hmm. You're dating yourself now, by the way, Jim.

But that was classic. And I remember the time and the uproar, you know, there were people dying in the other world. People didn't care. But you changed the Coca -Cola formula. I'm going back to crazy. And that's what a lot of people did. They were really crazy because it undermines people's trust. Same thing happened with Mercedes. When Mercedes decided to bring in models that could be more suitable to more people, their long established clients who had test.

Yeah. Yeah.

prestige status by virtue of their car suddenly were really dark at Mercedes because they went, you've just devalued the brand by bringing in, you've short -term help boost sales, but for the long established rank and file Mercedes drivers, you've basically cannibalized the value and the prestige of what used to be like owning one of your cars.

Mmm. Well, Tiffany is actually a perfect example. There's a story around Tiffany and most of us know Tiffany has been high brand, high luxury connoisseur and you know, everybody, you know, they position themselves to be, you know, everybody, every woman wants a Tiffany diamond ring for their engagement, right? It's an aspirational. And so Tiffany one year, I can't remember exactly what year they came out with a silver necklace and it was at a lower price point and the silver necklace became such a hit.

It's an aspirational, it's an aspirational, right? Yeah.

Um, that it actually, I believe, and don't quote me on these, but I think I'll use this as an example to kind of maybe highlight, you know, the story. So don't quote me on this. Don't Wikipedia, Wikipedia me on this, but basically the silver necklace from Tiffany was such a hit that I believe it, you know, created like a third of its sales in that one year. Um, and so it was a fascinating, so it was a massive renew, just basically the same meaning that it was a massive revenue, uh, revenue generator for the company. But the thing is, is that it was because it was a lower price IDM. item and it was actually from Tiffany's. What ended up happening was that it attracted a lot of teenage girls who could afford to buy this and wanted this and they started going into the stores to look for this silver necklace. And the brand itself had to look hard at itself and says, is this who we want as our customer base? And the reality is that they had to fight. against themselves because at one point, it actually brings in a lot of money, a lot of revenue, which is what every company wants. But it's at the same time, you got a, you know, a, you know, say someone who is appreciative of Tiffany brand is inside the store. And these teenage girls are coming into the store. Now, it's actually devaluing for that prime customer, the target audience, that the value of Tiffany's is attracting the wrong target audience. So what Tiffany had to make a tough decision on do you kill? the thing that's making you a lot of money or you preserve the brand. And the story goes that basically over the next year, they started phasing it out, started raising the price on that to remove that, to preserve the brand because that's what is really more important. They saw the value in the brand itself rather than trying to take a short term gain on the revenue from this smaller silver necklace that could have made a lot of money for the short term.

Yeah. And so fundamentally they hadn't established brand. They had brand authority in that space. They came out with a feature and, and you know, like it takes a lot of courage, like you said, to, to go, this is successful. However, this is not really going to help us in the longterm. And this is, I guess, one of the things that I've always been mindful and cautious of, particularly if you are a product and service to people who haven't used your product and service for the first time is different. If it's a trial. But if it's a product and you massively decrease it to get people in the door, the problem is they anchor that price to that service. And you have Buckley's chance of increasing your prices over the long term. And so effectively you see that a lot of people in service -based industries who radically discount and fundamentally someone will do something and it's that race to the bottom where people discount. And there's only so far that that'll go. but it's very difficult to then shift your audience to a different price point because they'll go. Whereas, you know, when you're dealing in the value aspirational brand area, if you increase your prices by 20, 30%, most people don't even bat an eyelid. They just go, I get so much more benefit to that, that that's acceptable. But if you try and increase incrementally on someone who hasn't established value beyond price, is very difficult to shift that and you're kind of stuck at that level.

Yeah, yeah. And I think that's, that's positioning. If you think about, you know, these lower brands, it's not that's a bad strategy. It's just that it's a different strategy. And so, you know, if you're going to go for the race to the bottom, yeah, it they are very successful. Yeah. The challenge is, and then you're playing, you're playing the volume game, right? So you have to deliver on a lot more volume. And so, but if you're a boutique, and you're trying to be unique and very specific to a certain group, you can't

Well, Walmart, for example, Walmart, for example, that's very successful.

discount, you have to go for a higher price model. It's just a different model. So for example, if you go back to Apple, for example, when have you ever seen Apple products being discounted for more than 10 %? It's not it's you can't I think is one day only maybe. And the reason why is because they have a price lock against every even their people who sell their products, they have a contract with them to never sell their prices below 10%. And so what they're

Yeah, very rarely, hardly ever, yeah, if at all, yeah. Yeah.

in India, if you do see a product like say from a store that sells an Apple product and they give you 10 % or whatever, they can't do it for less than that, I believe, because that's in their contract, what they do is they bundle with everything else, there's just hope they're not making much money from Apple. What they're hoping for is they sell the product, move the stock, but I hope you while you're there, you buy a bunch of other products that could make them some money. So that's the thing is because Apple wants to keep their product high, no discount, so they're not, you know, butchering their own sales. And that's why they do it that way because they know that people would just discount their products to a point where they were just trying to lose money so they can actually get sales elsewhere and they don't want that reputation. They want to keep their brand. So I do want to bring something up around this, which is just a slight turn on, on a topic here. It was interesting to talk about sometimes there's a, you know, a lot of people like employees, for example, have this tendency sometimes to go, I want to get paid for what I'm worth. especially the new generation. And it's really, it's just interesting conversations around, you know, what, what is worth mean, and this is value, right? So they're trying to say, you know, when people go, I, you know, unless you have a six figure job, you don't actually, you know, I'm not even going to take it or consider it, right. And I know there's inflation and so on and so forth. I'm not saying that no one deserves that or anything, but I just thinking about these, there's a lot of employee, please would demand, you know, a pay a certain pay. because they feel like I'm worth it. But I saw this really interesting video around business. And it was this concept around the point of a business or the point of an employee is that you are supposed to get paid at a discount to the value you bring. So going back to my very first comment around the first thing around price and value is that really the business hires an employee to do a job. so that that person's job, the value that that person creates, actually is much higher than the value that they're getting paid for. Because if it doesn't work that way, if it's equal value, there is no business because the business then just really only exists to employ the employee. And that's not what a business is about. In a capitalistic society, the job of any business is to continue to grow.

Yep.

so that you can take that profit to drive your own mission, whatever the mission is for that person. But it's really interesting concept to think about, the concept of being paid equally or what you deserve isn't really the business model of any business model because you're supposed to get paid less than what you actually deliver on. And so, but for the employee who might be listening to this, well then, how do I increase my pay? I'm not saying you shouldn't deserve a high pay.

Yep.

But it's same thing of what a business would do is that you have to, just like a personal brand or business, in order to get higher paid, you have to create higher value, right? The more value you provide for the company, the more raise or money or salary you should get because you're creating a greater value proposition for them. But it can't be equal to the value you provide because it just doesn't make any rational business sense for the company to pay you, if you generate $100 ,000 and they pay you $100 ,000, well, no one wins, right? The business is actually not moving forward. But if you generate a million dollars and they pay you 100 ,000, you know, they're getting $900 ,000 in value in return, it's a steal for them to pay you maybe 150 ,000 or even 200 ,000 because you're generating a million dollars for the company.

But yeah, yeah. Yep. Yep. And that's, that's how bonus structures, particularly in many industries in the finance industry really come into play where that's exactly what you highlight a really good point where people quite often have a, an expectation of what it is that they do, where they come in and say, I feel I deserve more money because I come to work on time. I do my job. And it's like, okay, there's a difference between these are the expectations of your role. as opposed to the additional value you bring to the employer. And so that's pretty much what we always say. If you want to increase your income, you need to demonstrate value over and above what you paid so that and negotiate. So that's a part of you that then sells of the value that you bring to the person so that they can see it and they go, great, awesome. Now let's build a structure that everybody wins. And really when we've employed people as well,

Yes.

We always had a hybrid model where we went, okay, these are the base expected. This is the base salary you will earn. If you want to grow that, this is your opportunity. However, you have to demonstrate the value first so that we can see that to then to incorporate. So that was why I never, I always feel that commission -based value -based stuff is really important in the sales context, because it can be a catalyst and a motivator to get people moving. And then it doesn't cap people's upside potential, but people have to know that the expectation of an employer is always the demonstrate the value over and above what it is that I'm paying you to do. And we can consider and talk that, but if you just walk in expecting that to be happen, you'll quite often find it's a mismatch.

Yeah, absolutely. So is there any parting words that you want to talk about or summary of what you feel around price and value, Jim?

Yeah, I think that it's been a lot, particularly at the moment with interest rates and inflation, cost of living that's been spoken about a lot. People are naturally more price conscious and they're making decisions a lot of the time on price. Not all of them, but I've also noticed a trend that there's certain things that people really value. Like you only have to look at... Taylor Swift touring around the world at the moment. And she's at the time of recording in Australia, sell out concerts, you know, 85, 90 ,000 people are venue night after night. And people are paying overs and a lot of money for the concerts in an environment where cost of living is really high. So there's certain things that people go, I would rather go without that in order to have this. And so I think the discernment and the decision making, you've got to look at it and say, It's not that people suddenly are willingly choosing something because they're abundant with it. In times of tighter cashflow, value has to be what you focus on. Because if it's just price, then people will always look for a cheaper option. But if you can demonstrate value, people will cut other things out before they cut your product and service. And so a really important thing that I always talk about with people is, demonstrate the value of what you do. If you're in a business, demonstrate the value of what you do to someone that's not a commodity, that's like, it's not a, basically a luxury, it's a necessity. And if you can position what you do as a necessity to help someone function better, more effectively, more efficiently, they will see it that way. They'll see the value. And in times where things are difficult, they'll choose to basically... cut something else before they necessarily cut your product or service. So it's just always demonstrating value and particularly at times where people need to make discerning decisions about finances, you'll find that yours won't be the first one.

I think my summary would be that, you know, whether you're a business, a personal brand, or whether you are an employee, the key element, what we kind of describe, if I can summarize it, is always create more value than the price of what you're offering or what you're going to set it for. So the price is always at a discount to the value you provide. And if the greater the discount, the more likely, the more probability that you're going to get it at the price, at that price. And so, And that goes with the employee that goes with the business. And I think so it's really comes down to the ability, your ability to be able to increase the value versus the price and that higher percentage. I think that will be the best. The second thing I would say, what's really important that I want to make sure we kind of go back to this is that the importance of actually creating value in your relationships and building those values and relationship. We talked about them many other podcasts around that. And then I think just the whole point of ensuring to invest. back into your relationships over time will stack on those values. And you never know, you know, how far we'll come in the future. I mean, I was thinking back as you were talking earlier, Jim, about how we first met, you know, Jim was an attendee of one of my seminars in Melbourne. And I remember our first conversation and then from there, you know, over the years, you know, I ended up, you know, working with you to help me with, you know, my finance and my mortgage for my house. And then, we then started talking that we were both moving to Europe and then, and here we are, you know, creating a podcast and creating seminars together and events together. And that relationship took time to develop and to the relationship kind of took, you know, building that trust. And we were both depositing, depositing, depositing with no withdrawals. And I think that's, that's the hell you just never know. And it's not like from that first meeting, I'm like, oh yeah, you know what, I'm going to, you know, somehow extract some stuff, some, some stuff from gym at that spot. No, of course not. It was like, it's just building relationship.

Yep.

And we found kinship, we found similarities and certain similar visions. And over time, we developed that friendship over time. And now we have a podcast together and sharing across the world. So those investments, those deposits into your relationship goes a long way. And I found that to be so much more important now that I'm here in Europe, it's in a new country. That's been one of the biggest thing that I have ever... biggest thing I've ever invested, but also the biggest returns. My life has really changed because of the relationship I built and continue to build. And it's amazing. I don't know what that's going to turn out to be in the next three to five years, but I know isn't heading in the right direction. So, and again, we don't know. And only time will tell when we look back and go, Oh, remember that time? All these dots will start connecting. And I think that's what's going to happen. I'm looking forward to being in the future, looking back and seeing the connections we made.

Yeah. Yeah. That's cool. Lawrence, before you sign off for anybody who's watching, um, anybody watch, uh, watches the podcast video, we came across a feature. That's a really high value, um, thing to our recording platform. And I just accidentally found that out the other day. When I do a double thumbs up, it lights up my whole backscr... Lawrence is, you know, something wrong with Lawrence. It doesn't happen to Lawrence, but it happens to me. So anybody who's watching, if I double thumbs up here.

I don't, doesn't happen to me. Doesn't happen to me. Only for special people. There you go.

It's like a lightning show. It's fascinating. So I just wanted to bring it in. I just wanted to bring it in somehow today and just make fun of it. But yeah, anyway, that was just me just going off on a tangent, just amusing myself with something that I found really funny.

Fireworks. Jim's gonna be using that to close every podcast now. All right, guys, I hope that you enjoyed that today's podcast around price and value. This price of this listening to this podcast is for you to share this podcast with someone that you feel that's gonna get some value. That's the only price we ask for. There's no charge for this otherwise, but please do that. Share this podcast with others and the hope that we created enough value for you and your families for years to come. Guys, until next, until then.

Oh, well, actually, yeah. The sign -off.

Until the next episode is Jim and I here on the Wabi Sabi podcast, the art of imperfection. We'll see you later.