What Price are You Worth?
How do you put a price on something? Is it just what you can find someone to pay for it? The highest priced piece of art that was auctioned was a painting by Cezanne called the Card Player, selling at $260 million. But that is not the most valuable painting, which is believed to be the Mona Lisa. It hasn’t been auctioned, but the value placed on when it was last insured in 1962 when it went on tour, in today’s dollars, is $770 million.
How did the insurers value the Mona Lisa? It’s certainly not replacement cost. Another way of valuing it is its economic worth to the gallery showing it to the public and to France. It’s estimated that 8 million people come to The Louvre every year to view the painting. On that basis, the valuation looks cheap considering that a large number of the visitors would be international.
While there are artists with the skills who could copy it so well that almost no one could distinguish it from the original, 8 million people would not pay to view what they knew was a copy. I don’t know how much it would cost to pay such a high skilled artist to produce a copy (legally), but the highest price for a piece of art by a modern painter (Jackson Pollock) achieved was $160 million. But that was for an original work and it was way more than he was paid for it. (Who’d be an artist?)
When you price your services, are you basing it on your production costs? How many hours it takes to deliver them? The cost of consumables? Most artists don’t even get that for their paintings.
Alternatively, you can look at the economic value of the service to the buyer. How much time and money does it save them? Does it make them money? If your product can make the buyer $1000, is $100 unreasonable, even if the production costs may be below $20? Theoretically you could charge $999, but only if there was zero risk of the buyer not receiving the $1000. A risk premium of 10:1 is certainly reasonable for most good business investments. (You pay me $100 and I will show you how to make $1000.)
While we might regard the Mona Lisa as priceless, someone has still found a way to put a price on it. What price your services?
All you need to do now is to Empower yourself and take action …
May Your Business Be – As You Plan It.
Dr Greg Chapman – The Profit Whisperer
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