Price – clarifying a concept to improve service.
The conversation continues in Technology – A bride, or to be bridled?
12 October, 2017
Trade originated in barter transactions. As trade increased, barter transactions became more complicated and money evolved as a means of exchange. The net money transaction (or ‘surplus value’) represents the value created, or, the human ingenuity involved.
Money is therefore human ingenuity distilled out of practical trade between people.
Money is, distilled spirit, via the human being.
Why does money become price?
At which point does this happen?
One has to be careful not to be taken in by the price of beans in the Supermarket and how this is set, as this may hide what is really going on.
Let’s stick to principles.
Faced with various canned bean options on the shelf, price is a major determinant of what I choose until I place my value system into relationship with the beans. Let’s say these beans are all baked beans in tomato sauce:
- I may like glass containers or organic beans in tin.
- I might be buying for my husband who wants a branded big tin.
As soon as I apply something of my active value systems – my thinking in regard to the baked beans in tomato sauce – the price issue goes away somewhat.
The other side of the transaction is also relevant. I am the farmer and processor of the baked beans. I know how much effort goes into it and what it costs. The weather problems, the diseases that happen to crops, the labour issues and so on. When I talk to other farmers and processors of baked beans, they are all willing to pay more for them because they understand the product.
From the above then, there are three things to consider:
- Where products are nearly identical, price is the determinant. Old products, or products that have been made for a long time, fall into this category. Here, human beings have gone, to some extent, into habit mode in all areas related to this product. This is made clearer when one considers the value in new and innovative products that people want to understand for the first time.
- When human beings have their own value system and know what they want, price become secondary.
- Where human beings understand the product better and how much human ingenuity is involved, price also becomes secondary.
The thin but relevant line that runs through all three is that where the human being is active inwardly or wants to be active or wants to learn, price becomes secondary.
Let’s check this out by taking the following scenario:
A lazy or ignorant person needs window frames for his house.
He gets different people in to advise him.
He has no value system around window frames.
He also knows nothing about window frames.
The supplier representatives, even the honest ones will not have a way of sharing the value of their product with this customer.
The customer will choose the window frames based either on price or some emotional sympathy.
Little or no human ingenuity is applied from inner activity and consciousness of the person.
There is little desire for knowledge.
So, where somebody just wants something, a product or a service, without bringing their own value system to bear or not wanting to learn about it, price becomes the main if not the only consideration.
Take a scenario where a person wants to learn something or has a value system related to it. Say a person has a real interest in fruits and varieties of apples for example. Where does price come into their equation? Price is always secondary. The same for someone not only interested in a car for transport but because they want a specific size or fuel efficiency or get-away speed. Price becomes secondary.
The net take-out of all this is that where there is inner human activity, value trumps price, but where there is no inner activity, price trumps value.
Where does one see this in business?
Well, new products, like iPhones attract attention because people have a value system with respect to these.
Why are coat hanger sales so price competitive? They are old products, well recognised to perform a good function and no more owned human ingenuity is required to understand them. The price might rise when someone hangs something unusual on a particular style hanger, but for the rest, they remain only a commodity. It is difficult to bring too much personal inner participation to a hanger. Hanger producers have to produce and distribute them very cost effectively.
This is where human ingenuity is still possible and where some value can come from.
So what do you do if your product is more or less a commodity?
You have to find ways to draw customers into wanting to be educated and to call on them to have a value system around this type of product.
In most products this is possible but there are those like fuel where this becomes difficult because we all believe that they are essentially the same.
In communities where there are laws and they are enforced either criminally or civilly, this in itself creates an awareness around issues.
Safety equipment will meet standards in these communities because people will have a value system around these because of the laws or standards as well as the enforcement of these. The price of safety equipment will inherently have a higher base than in communities where there is no human consciousness around safety equipment because of the inherently ‘lawless’ nature of their community. Communities that have no, or low, standards and no enforcement of these are going to be the poorer communities. Less value is created in these communities as there is no pressure to exercise human consciousness or ingenuity.