Value is a strange thing…
Think about this for a moment.
You can buy a t-shirt for as little as $1 or as much as $990!
Or shoes for as low as $7 or as expensive as $500,000 – yep you read that right.
Meals can be purchased off a dollar menu or a high-end fine dining restaurant.
So what’s the difference? T-shirts are simply clothes. Shoes give protection and a bit of style. Meals nourish your body. So why would someone pay 1000X or more?
What is Price?
Before we dig in on value let’s discuss price for a moment.
The Oxford dictionary defines price as:
The amount of money expected, required, or given in payment for something.
I think we all have a pretty good handle on what price is. When you go to the store and buy a loaf of bread the amount you pay is the price. Simple. There’s nothing complicated about that.
Setting the Price
Who decides on price? The seller.
The seller of a product gets to set their own price. Whether or not a buyer will buy at that price is a different story.
As a real estate agent you already knew that, right? I’m sure you’ve had sellers who price their home too high. And why do they do that? Well, we’ll talk about that in a minute.
Negotiating the Price
Although the seller sets the price that does not mean that is what the seller will get. There is another side of price. The buyer.
Ultimately, the price on a product sold (not just up for sale) is a negotiation between both buyer and seller. If there are no buyers willing to pay $990 for a t-shirt then the price doesn’t really mean much. Only in a situation where a transfer of funds occurs does price get truly set.
But what happens in a negotiation on price? Both seller and buyer are setting the value on the goods or services being sold.
What is Value?
According to the Oxford dictionary value is:
The regard that something is held to deserve; the importance, worth, or usefulness of something.
Unlike price, value is based on something other than expectation. Value is based on regard, importance, worth and usefulness.
Grant Cardone, one of my favorite authors, explaines this idea perfectly so I will paraphrase his statement from his book If You’re Not First, You’re Last. He basically explained that if he sells his book for $30 that is the price. But you would never buy a book for $30 if you thought it was only worth $30. The only reason you would ever buy the book is if you felt the value was more than what it was priced. Otherwise you should just hold onto your $30.
This is value!
Setting the Value
Value can be based on anything. And it is unique to everyone, every time.
Let’s say you have not had anything to eat or drink for 5 days (I don’t know why! Stop getting logical with me and just go with it.).
But you had $5 million dollars (You are going logical on me again…stop it!).
Now, all of a sudden a hot dog stand appears in front of you with endless supply of cold hot dogs and lukewarm water.
How much would you be willing to pay?
My guess is that you said $5 million dollars. If you didn’t you need to increase the value you put on your life!
But, let’s say you had a decent breakfast and it was about lunch time and you were walking down the street and this same hot dog stand appeared with cold hot dogs and lukewarm water. How mcuh would you pay? Probably nothing, or no more than $0.50 – and that would only be if you couldn’t find anything else to eat and couldn’t just wait for dinner.
What is the difference? Value!
Price vs. Value
What is the difference then?
Price is the cost of something. Value is the benefit you will get from buying something.
Now consider your business for a moment. What is your “price”? How about your “value”?
I can already hear it, as a buyer’s agent the price is $0 since the buyer doesn’t pay that commission. Is the price $0?
Various Forms of Price
Price comes in many forms. Money is the most common but here are some others:
- Opportunity Cost
Buying a home, even without paying a commission, comes at a price. This is a very important consideration as you determine the value you offer. Just because the price tag is $0 does not mean there is no value or that value does not need to be offered. Remember price and value are very different.
What Value Do You offer?
When someone is considering working with you what value do you offer?
How are you unique from the competition they can choose from?
What will you do to offset the price with value?
The Platinum Rule
You’ve likely heard the golden rule…
Do unto others as you would have them do unto you.
But what about the Platinum Rule?
Treat others the way they want to be treated.
When determining the value you can offer you need to consider two perspectives – yours and your customer.
When considering value from your perspective you must let go of humilty. Think about how great you are. If you had a superpower what would it be (not like flying or being invisible) – what do you do better than others?
Although this may change over time as you develop your skills, this part of value will be fairly constant.
Looking at your value from the customer’s perspective will change. For every customer. Every time. The only way to identify the value you can bring to the customer is by asking questions. Being curious. Identifying the need or desire they have at that moment. Just like the hot dog stand.
We talked about sellers who price their home too high to sell earlier. Why do they do that? Because they value their home more than the buyer’s do. They have memories. They have put work into the home. They have made it their own. Uncovering these value points will help you in working with those customers. Helping them understand the difference between value and price. While also increasing your value along the way.
Make yourself more valuable. Ask yourself some questions to identify your strengths and the value you can bring to your customers. Here are some questions to help you get started on determining your value:
- Identify Your Stengths
- What comes easy to you?
- How do you stand out from your competition?
- Ask others, “What do you think my strengths are?”
- Where do you spend a lot of your time?
- What do you hate doing? (go the other direction – what’s the opposite of the thing you hate?)
- Where do you find enjoyment?
- Where does time disappear?
- What seems to just click?
- Where does life seem clear?
- What energizes you?
- Increase your value through knowledge
Good luck as you determine and continue to increase the value you offer!