The percieved value of a thing can be explained by a semi-simple equation:
Value =
🥅Perceived % of final goal achieved X 📜The perceived credibility of the provider X 🎲The perceived proof/likelihood of success in getting the goal
÷
⏳The amount of time to final goal X 🔨The effort and sacrifice of the recipient X 💰The financial risk associated
This leaves 6 things that can effect the value of an offer:
- 🥅% completition of final goal
- (Not “well recorded music” but “a sustainable music career”. Be careful not to examine the steps as the end goals)
- 📜Provider credibility
- (How can they prove expertise in the field? What accreditation do they have? where did they go to school? Who will vouch for them?)
- 🎲Believed liklihood of success
- (Who has done it and had success? How do they guarentee results? How have they described the components of the deal? Is their offer believable or absurd?)
- ⏳How long it will take to get to final goal
- (What is the time from agreement to finished goal, what is the time frame to the “first win”?)
- 🔨Sacrifice and effort to acheive success
- (How much effort will the recipient need to put in to get to their goal using the agreement? Will they need to learn stuff? Is that education provided or are they provided the materials to learn from?)
- 💰Finacial risks
- (Is there any financial risk? Is it a large non refundable payment? Is it a hire purchase? Are there any lifetime guarentees?)
As may be understandable from the equation. The top of the equation only contains positive attributes of the deal for the recipeint, while the lower side of the equation contains negative attributes of the deal for the recipeint.
Value manipulation
Due to the equation using a division operator this results in there being an easy method to manipulate the resulting value of a deal. It is possible to increase the deal value by: either increasing the possitive attributes, or squashing the negative attributes. And this makes intuitive sense.
For example:
Consider two fruit sellers. Seller A and seller B.
You want to buy 5 rose red apples because you want to start putting them in a bowl in your kitchen for anybody to pick at whenever. You want this to continue long into the future. Your budget is £20 per month
Seller A is the 25 year old son of an apple farmer that offer to sell you the 5 apples for 50 pence each, and if any apples are not eaten in time and become mouldy, you can return it to him for he can use it as fertiliser, and he will give you your next batch of apples for 20% off.
While seller B is a 60 year old farmer who has been featured in many morning news interviews giving his opinion on the apple industry. He gives you the deal of 5 apples for £1 each, and you can try one now for free to see how tasty they are. But also adds on that if you wish this to be a long term idea, for £15 a month he will deliver apples to your door every week to ensure that you always have a fresh bowl in your kitchen.
Seller A’s value equation would look like this: (all marked at 100)
- 🥅% completition of final goal : 50 (still need to buy apples each week)
- 📜Provider credibility : 40 (son of apple farmer)
- 🎲Believed liklihood of success : 80 (you can see the apples, they look good, ut you havent tasted them)
- ⏳How long it will take to get to final goal : 60 (still need to spend time going to market each week for the apples)
- 🔨Sacrifice and effort to acheive success : 70 (still need to go to the market each week)
- 💰Finacial risks : 50 (£2.5 weekly, £10 monthly)
total value = 0.95 units of value
Seller B’s value equation would look like this: (all marked at 100)
- 🥅% completition of final goal : 90 (still need to put them in the bowl)
- 📜Provider credibility : 80 (tv apple expert, old)
- 🎲Believed liklihood of success : 100 (you can see the apples, they look good, and youve tried one)
- ⏳How long it will take to get to final goal : 30 (you just need to take delivery)
- 🔨Sacrifice and effort to acheive success : 20 (you still need to take delivery)
- 💰Finacial risks : 75 ( £15 monthly)
total value = 16 units of value
Here is the break down in their value equations and how seller B was 16 times more valuable.
Seller A = (50 X 40 X 80)÷(60 X 70 X 50) = (160K)÷(210K)
Seller B = (90 X 80 X 100)÷(30 X 20 X 75) = (720K)÷(45K)
As you can see, seller B manipulated the value equation so that the positives were better (Closer to end goal, Better credibility, Higher belief in success). Whlie the negatives were lessened (Less time and effort) Even though the apples cost 50% more.