There’s an equation for value I learned from a boss of mine. Value equals:
Benefits received / Costs incurred
Costs aren’t always monetary; your time and energy is also a cost. And benefits aren’t always tangible; it can include things like peace of mind.
In order to increase price, you have to also lower other costs OR increase benefits, otherwise you lower value.
And value is a perception, not an objective measure.
Did they change anything meaningful to you when they increased their price? If not, then their value decreased—at least for you.
But maybe they added some amazing kid safety controls at the same time as the price increase. If you don’t have kids, the value went down. But a parent who wants those features might have net neutral or even positive value perception.
There’s an equation for value I learned from a boss of mine. Value equals:
Benefits received / Costs incurred
Costs aren’t always monetary; your time and energy is also a cost. And benefits aren’t always tangible; it can include things like peace of mind.
In order to increase price, you have to also lower other costs OR increase benefits, otherwise you lower value.
And value is a perception, not an objective measure.
Did they change anything meaningful to you when they increased their price? If not, then their value decreased—at least for you.
But maybe they added some amazing kid safety controls at the same time as the price increase. If you don’t have kids, the value went down. But a parent who wants those features might have net neutral or even positive value perception.
Good point. There’s a subjective element to it too.