Value vs Price

What is Value?
Value is a personal perspective of one’s willingness to pay for the performance delivered by a product, process or project.
Good value is achieved when the required performance can be accurately defined and delivered at the lowest life cycle cost.

The Value Equation
V = F/C

Where V = Value from the Owner’s Eyes
F = Function
C = Cost

Why do we need to be particular about price every time?

Why are we not giving priority to Value instead of Price? Why Value is being given the back seat?

If you spend Rs.10/- extra and get Rs.1000/- as useful output or saving every day on running cost instead of saving Rs. 10 and spending Rs. 1000/- on running cost. Which will be better.

Case Study – Electric Rice Cooker:

Recently, I bought an electric rice cooker, I was surprised to see perforated plate was not available in the pack. On checking with the concerned, they said this model does not have such a plate and if I prefer to have it, I should pay Rs. 160/- etc.

The rice cooker (Popular Brand) cost was Rs.1500/- which was cheaper than any other brand. But while cooking, every time we need to scrap at least 100gms of rice as they are getting charred.

So, I took the case very seriously with them. The marketing head called me over the phone to whom I explained how the R & D team has worked out on cost-saving without adequate validation.

I also told him I would not have minded paying Rs.160/- extra along with the perforated plate if that was sold as part of the original pack. Now, as the product is not fully delivering its functional purpose, I deny paying Rs. 160/-

Then he understood the problem and ensured that the perforated plate was handed over to me at my residence free of cost.

Corporate scenario:

Many a time, even in a corporate scenario, in the name of Policy or Budget, the organisation loses on operation cost that erodes profit margin. Added to lack of monitoring and control on the processes, utilities, or any other that supports the business, gets pulls down with the profit margin.

At times the organisation may also get perplexed that Business is available, everybody working on that, Sales is happening, all seems to be going good but when comes to the bottom line the P & L is something disturbing.


So, if we need to run our home or business while buying a Product or Service, first we need to get justified ourselves that is it for a need or a want then to give priority on Value rather than Price.

If not convinced of the Value, let us decide not to buy them.

Most important:

After buying such a Product or Service, check for effectiveness.

6 thoughts on “Value vs Price

  1. Mohandas Ukkandath

    Absolutely Agree. Customer thinks and talks about the price only once at the time of buying. Where as his experience while using the product is long term and so we have to focus on that. We try to follow this in most of our products by using the highest quality (not necessarily lowest cost) components and materials.

  2. Dilip Kumar

    Great example for understanding the concept. Value addition is very important rather than price.Thank you sir

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