What is Value?

The word “value” is thrown around so much in sales that it has almost lost its meaning or indeed become valueless—ironic, isn’t it? Any basic sales guide starts with the premise that we need to find and demonstrate value. But this raises an important question: What does “value” really mean?

To answer this question, we must first acknowledge that value is entirely subjective. You’ve probably heard the saying, “One man’s meat is another man’s poison.” This perfectly captures the essence of value as a concept. For instance, the world’s most expensive burger costs $6,000. You might think, “I’d never pay that much for a burger,” but someone did—and that’s the point. To them, it was worth that price. Value is subjective.

This creates a challenge for sellers because you can’t just ask a prospect, “What does value look like to you?” Instead, you have to uncover where the value lies. When salespeople don’t grasp this concept, they often start engaging in unproductive or misguided behaviors.

For example, when sellers can’t effectively articulate value during a demo, they often end up showing the prospect everything the product can do. This turns into a tedious 2-hour documentary on their product. Not only is this unengaging, but it also diminishes the product’s perceived value. It’s like saying, “Here’s everything we offer; now it’s up to you to find the value.” This approach not only devalues the product but also dilutes its value. Even if the prospect identifies something valuable, they’re also overwhelmed with features they don’t need, making the pricing seem excessive.

So what dictates value? Well, there are several factors but for most sellers there are 3 that are very important:

Scarcity

It’s well known that Vincent Van Gogh only sold one painting during his lifetime, and rumors suggest that even that sale was orchestrated by his brother, Theo Van Gogh, as a favour. In 1888, while living in the south of France, Van Gogh painted The Sunflowers, a piece he couldn’t even give away at the time. Yet, in 1987, the painting sold at Christie’s for $39.9 million.

This is a prime example of how scarcity drives value. Since Van Gogh is no longer alive, he won’t be creating any more masterpieces, which has significantly increased the perceived value of his existing works. There’s no doubt that The Sunflowers would sell for much more today.

Pain & Urgency

If you search for an inflatable rowing boat on eBay right now, you’ll see that you can buy one for about $15. As you’re reading this, you might still think that’s expensive or unnecessary. But now, imagine you’re drowning in the Atlantic Ocean, with waves crashing over you and each breath a struggle. How much would you pay for that rowing boat now? What has changed about the boat? Absolutely nothing—it’s still the same. However, your need for it and the problem it solves have skyrocketed, dramatically increasing its perceived value. This is an example of how pain and urgency drive perceived value.

Supply and Demand

The California Gold Rush of 1848-1855 offers a compelling example of supply and demand dynamics. When gold was discovered at Sutter’s Mill in 1848, thousands of people, known as “forty-niners,” flocked to California, drastically increasing the population, and creating an enormous demand for goods and services. Prices for mining equipment, housing, and basic supplies skyrocketed, with items like shovels selling for over $50, a significant sum at the time. The labour market also shifted, as those who chose to work in traditional trades, such as blacksmithing and carpentry, commanded high wages due to the scarcity of labour. While few prospectors struck it rich, the real fortunes were often made by those who supplied goods and services to the miners, highlighting how those who cater to booming demand can thrive in such economic situations.

This can work in reverse when the incentives are misaligned. In the book Freakonomics, Levitt and Dubner discuss an interesting example involving Israeli child care centers that attempted to reduce the number of parents arriving late to pick up their children by introducing a small fine. The daycare centers expected that this financial penalty would discourage tardiness. However, the result was the opposite: the number of late pick-ups actually increased. The fine inadvertently shifted parents’ perspective from viewing punctuality as a social obligation to seeing it as a transaction, where paying the fine became an acceptable cost for being late. This change in behaviour highlights a central theme in the book: while people respond to incentives, these incentives can often lead to unintended and counterproductive consequences, especially when they disrupt existing social norms.

In the end, understanding value in sales isn’t about following a rigid formula; it’s about recognising the unique factors that shape a prospect’s perception. Scarcity, pain, urgency, and the dynamics of supply and demand all play pivotal roles in determining what something is worth to someone. As sellers, our challenge is not just to highlight these elements but to tailor our approach to the individual needs and circumstances of each prospect. By doing so, we move beyond just selling a product—we create real value in the eyes of our customers.