Economics of Value

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Commodities are cheap. They’re cheap because they’re standardized, easy-to-find and easier to replace. There’s nothing unique about them and their value is driven from a consistent set of expectations from each of the units in terms of shape, size, color, taste, or performance.

Economics keep coming into the equation and before I make my point, let me share two unique products with you:

Koh-i-Noor
Koh-i-noor Diamond – The most valuable diamond in the world

Cost: Priceless

Koh-I-Noor means as “Mountain of Light” from Persian. It’s a 105 carat (21.6 grams) diamond that was once the largest known diamond in the world. The Koh-I-Noor was originated at Golconda in the Andhra Pradesh state of India. It was owned by various Sikh, Mughal and Persian rulers that fought each other from time to time. The stone was found to measure 36.00 × 31.90 × 13.04 mm. The gem has now become the property of the British crown and is kept in HM Tower of London and it’s a popular tourist attraction.

Clive Christian Perfume – the most expensive perfume in the world

Cost: around $215,000

It is a mixture of pure and precious flowers from all around the world. The collection used is a rare one and of its purest forms. the lead crystal bottle to keep such a potion is handmade and the collar part of the bottle is an untainted gold-plated 24 karat and sterling silver. It is stamped with one of a kind seal and has an outstanding diamond cut solitaire. The top is twisted after the unique design granted by Queen Victoria herself. The price of this magnificence is about $215,000.

 

When we think about products, it is simpler to understand why scarcity leads the price higher and uniqueness could mean the product becomes priceless. It is uncommon to think on similar lines about skills, expertise and individual contribution – when people are just used to doing regular work and only doing the thing right, they’re seldom thinking about choosing the right thing to do and excel.

If you are always into the regular rut of churning out deliverables; working on that final budget spreadsheet; or that major sales kickoff presentation, you’re doing important work – but that kind of work will help you little to drive your value up.

Take any important brand you care about and you would find that the price it is charging and people are willing to pay for that is not significantly related to the costs – that’s the effect of brand value; it makes the costs irrelevant.

When talking about individuals, you have to take charge of your own career and direction to create that sort of value – that is the only way out. If you’re not ready to bring out the ‘unique’ in ‘you’ forward, then your value will probably keep falling down with every new innovation in technology and/or almost certainly, somebody else will come forward to do the same work you do for less. Welcome to the Globalized World.

In order for you to command respect, value and high compensation, you have to regularly endeavor to keep the unique aspects within you (your USPs) shining! Be it your own entrepreneurial negotiation or a shot at corporate decision making, you have to be scarce to be valuable – you become scarce when you consistently do what most others would not try and most of the fewer who try could not do.

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