Price is what you pay Value is what you get – Warren Buffet

Price is what you pay Value is what you get: It’s fascinating how these two terms impact our day-to-day purchasing decisions. The price of a product is determined by the perceived value it creates. The most important thing to notice is that it is not actual value but what we perceive. The number one thing in any startup conversation is the value we create for our potential customers. All the terms such as value proposition, and customer focus rely on this single value that we can create for the customers.

The value in any market decides the price which we can claim for it. This is also dependent on the environment in which we are selling the product. The same product in a crowded market will be cheaper as compared to a market with less competitors. This is because the perceived value or differentiation is difficult to create in such a competitive space. Hence the quote, price is what you pay and the value is what you get.

Price is what you pay Value is what you get Meaning

This quote dominates most of the business and pricing discussions. We need to come back to the value that’s being created for the customers. In the initial stages, I was tempted to rely on cost-based pricing. However, for a customer, the cost is irrelevant. The only time cost-based pricing comes into play is when customers feel that the product is being overpriced for the value that it offers. So, it comes back to the question of value that we are creating in the market.

Price is what you pay Value is what you get

Warren Buffet

If we think something is of a higher value, we are willing to pay a higher price for it. Hence the term – perceived user value. In our perception, if a product or service gives us good value, we can pay an adequate price for it. Overall, the concept of price vs. value is a reminder to prioritize the intrinsic worth of things.

Value is what you get

This quote also has important implications for business owners and entrepreneurs. In order to succeed, they must provide value to their customers. By focusing on delivering high-quality products that meet customer needs, you can establish a reputation for excellence. Ultimately, someone buys a product to meet their needs. If your customer gets a great value, they will not only return but will actively promote your product. As long as you focus on the value that you get, price becomes immaterial at times. It is all about creating this immense value that will differentiate you as an entrepreneur.

In conclusion, Warren Buffett’s quote, “Price is what you pay, value is what you get,” asks us to keep thinking of value. The value is what a customer decides on whether to stay or buy your product. If you stop giving this value, the product dies an eventual death.