Price is what you pay, value is what you get

Translated from the original Spanish article.

“Value” is one of the most overused and, to my mind, least appetizing words in our shared jargon.

Like other marketing terms I catch coming out of my own mouth all too often: “angle,” “feedback,” “traction,” “stickiness”… anyway.

We reach for them because they’re handy in the context of the moment. Use them enough and they become a crutch we lean on more and more often. And, little by little, their conceptual richness wears away.

But that doesn’t mean they’re empty or meaningless words.

“Price is what you pay. Value is what you get.” Paraphrasing Warren Buffett, we come to that concept of value, one worth pausing on.

Every ideal exchange or transaction should feel beneficial to both parties. If we distinguish value from price, the formula fits. Price makes the seller happy; value, the buyer.

Value is a subjective, or circumstantial, matter. But I like to try to pin it down in common traits. I like the following proposal by Alex Hormozi:

Value = (Dream outcome Perceived likelihood of achievement) / (Time delay Effort and sacrifice)

The vast majority of commercial or marketing communications focus on the first or upper part of the formula: the promise and the perceived likelihood of achieving it → Boost your sales, look at our clients’ testimonials.

Few, and with good reason, focus on the second or lower part of the equation → Get there fast, effortlessly.

Because promising results is easy, even projecting the impact they could have on your circumstances. It’s not so simple to design your product or service so that it removes friction, delivers results quickly and requires as little effort as possible from the customer.

And it’s precisely because of that, because of how hard it is, that this is where the opportunity to offer differentiated value lies.