PRICE VS VALUE

    PRICE versus VALUE

I​t is the early hours of January 16 and I am walking to school. On arriving on campus, I met this guy having a discussion with his friends. In a proud rhetoric, he asked them if they knew the price of his sandals. At first, I thought it was just one of those guys who bragged about the price of everything they owned. I had a second thought and this time around, it was different. Does the price really matter? I asked myself. Which is more important? Is it price or value?

Price simply refers to the financial reward you get from offering a product or service. On the other hand, value is what a customer believes a product is worth to him/her. How do we even make such a comparison? From a producer sentiment, price is or rather should be determined by one factor; “being able to sell as much as possible at a price as high as possible in order to make as much as you possibly can.” Of course prices are predominantly determined by the forces of demand and supply and government policies but that’s not the point. On the other hand, value, as seen by a consumer is this; “Being able to get the best quality possible at the lowest price possible. Of course this might not be the case for every seller and buyer out there but for most people, this is often the case. What could be the driving force behind these different lines of reasoning? You may ask. Trust me, I have the question in mind. P​erhaps, the seller is right. The price could be justified by the quality of the product. Are there times when these prices are way above what there should be with respect to the quality? Yes. But is it always driven by the malicious intent of the seller? No. The seller does not control the forces of demand and supply, neither can he/she control inflation rates, government taxes or even tariffs. Sometimes, these price hikes could be caused by internal crises in the company. Perhaps they are losing money and want to cover up on that. But should the customer bear the consequences of the internal failures of the company? I don’t think so. I will simply call this consumer exploitation.

O​n the other hand, the buyer could be right. Or maybe not. It is a very subjective position the buyer finds himself/herself in. What differentiates quality from trash? How good should a product be in order to be considered valuable? Is there even a metric that could measure something of this nature? Sometimes, it depends on what you want and your personal tastes and preferences. Are there times when the value is way below the price? Of course yes. But again, these decisions are not often guided by a proper understanding of how the market works. The buyer wants satisfaction which he/she might not be able to afford. As long as buyers make decisions based on emotions, there will often be wrong. You can’t always get what you want. If the quality is not what you would expect for such a product, just change stores. No need to complain. Besides, it is a free economy. No restrictions on how to use your money. Of course we cannot ignore the fact that market behavior should be regulated in order to avoid consumers’ exploitation by sellers. In a nutshell, there is not going to be any sort of understanding between buyers and sellers regarding this whole issue, at least not any time soon. This, nevertheless should not stop us from working on those policies and regulations that will ensure fairness in the market thus ensuring both consumer and producer satisfaction.

I​f there is nothing you have been able to learn from all this, learn this one thing which is my conclusion;​ “The price of the product or service is not what you should be interested in. What matters is if the value justifies the price.”

By Yimnai Nerus Zaumu