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Beauty is in the eye of the beholder – or why “value” is subjective

The Dalai Lama opens his present box looks inside and says: “Wow… NOTHING! That’s exactly what I wanted!” If anything would have been in that box it would have been less valuable to him.

Or a personal example: when I moved out from Bucharest to live in a village the buyer of my previous home said in disbelief: “You’re moving to a village?! There is nothing to do there!”… and that was exactly what I wanted: peace and quiet :).

And I am sure you have had the following experience: you notice a person receiving a gift and being grumpy and dismissive about it while you keep thinking: “I would have exploded with happiness right now if I were in his shoes!”

Every single time the object or the experience does not change, but the perceived value of it does.

Because of this subjectiveness, selling to your own wallet is dangerous. You may be thinking: “I would never pay $400 for a meditation app!” but that does not mean that other people would think the same. If meditation solves a big problem in their life, the $400 price tag would feel like a bargain!

In my quest to discover how to quantify value in a way that I can understand it from other people’s point of view I came across this formula from Alex Hormozi:

Value = Dream Outcome x Perceived Likely Hood of Success / (Delay to Outcome x Effort-or-Sacrifice)

A product that fulfills a big dream in a way that is guaranteed and does so instantly and with no effort has infinite value. Think “Aladdin’s Lamp” ūüôā

A product that fulfills a small dream with a poor rate of success and that it takes a long time and lots of effort has zero value.

And the mind-blowing part is that each term in the formula is affected by how the buyer perceives it and not if it is objectively true or not.

You may know that meditation is extremely helpful in expanding your awareness, but if the perception of your customers is that it only creates 15 minutes of utter frustration that is what is real for them.

And this is both a blessing and a curse. If you think everyone is like you then it is a curse as no one will see the value as you see it. But if you accept that “beauty is in the eye of the beholder” you will go the extra mile to communicate your offer in a way that your customers can perceive it as valuable.

If you understand the subjective nature of value, it is easy to understand how you can trade a paper clip for a house but most importantly it unlocks your mind to find ways in which you can provide immense value to your customers at a very low cost to you. And now you can create meditation apps that sell for $400 :).

don't waste time creating new products.

Don’t waste your time creating new products

Here is a mistake that I have made way too many times. 

I have this bright idea for a new product or service. I am so excited about it! But, I want to keep it a secret least someone would steal it from me. 

I work hard to implement it, test it, polish it. I am making sure it looks like how I imagined it. 

After months of effort, I finally launch…

… to crickets.¬†

There is no one out there who cares about my product or service, let alone steal it. 

The problem is that this is a selfish way to create a product or a service. You are choosing to work in a void in your head, and you are not doing it for an audience, so you never bother to ask for feedback or even ask if they need such a product. 

A better way is to test your assumptions before you spend any time building stuff. Building a useless product costs you time and money that you could have used to make something relevant and remarkable.

Testing can be as simple as saying this: 

“Here is what I am working on next. What do you think? Would you spend $100 for early access and an opportunity to give feedback on how I make it?”

Two things can happen:

  • less than ten people signup for the early access: good! – you thank and refund everyone and let them know there is not enough interest to build the thing. Don’t skip the “thank you” part, as they are your biggest fans! And now you just saved time, money, and effort that you can put into testing the next idea.
  • a lot of people signup – good! – the pressure is now on to build the thing, and you have feedback from people that will help you make it very relevant. You also get testimonials for the official launch date. Again, make sure to reward the early adopters for making this possible.