Today, I’m going to let one of my favorite business thought leaders take the reins.
I love Jonathan Stark and his daily “Hourly Billing is Nuts” newsletter. He reflects a LOT on what “value” is, as he’s an advocate of something he calls “Value Pricing” (pricing projects based on what they’re worth to the client). His ideas about pricing and billing have radically shaped my business; I highly recommend his work.
Here’s an email he sent to his list in February 2021:
“How much is a tank of gas worth?
The only correct response to this question is:
My wife would probably pay $50 for a tank of gas.
My 7yo daughter wouldn’t pay a dime.
Which one of them is right?
They both are.
Here’s the thing…
What something is worth (i.e., it’s value) is NOT a property of the thing.
It’s a perception in the mind of a human.
Don’t fall into the trap of thinking that what you do is worth something in an abstract general sense.
If you can’t find someone who wants to give you money for it, it’s effectively worth nothing.
And just to drive it home, one of his emails from November 2021:
“Up until the 1930s, the monetary system in the United States was on the gold standard.
The concept of the gold standard was this:
All the money printed in the U.S. was backed by an equal quantity of gold held by the government.
This arrangement prevented the government from printing an unlimited amount of money – i.e., they could only print as much money as they had gold.
In theory, this meant that someone could take a ten dollar bill to the US government and exchange it for $10 worth of gold.
Given this arrangement, I imagine that the people of this age thought of paper money as kind of like an IOU for gold.
I also imagine that those same people got pretty ticked off when the U.S. went off the gold standard.
I mean, if you don’t have gold behind the IOUs then they’re just a worthless piece of paper, right?
Not backed by anything.
Buuuuut, wait a second…
What’s GOLD backed by?
When you think about it, gold doesn’t have a heck of a lot of utility.
There are lots of metals that are lighter, stronger, cheaper, and generally more useful.
So why is gold worth anything at all compared to things like aluminum or copper or steel?
Gold is worth something because people believe that gold is worth something.
Here’s the thing…
Value is a story.
If enough people believe in the story, then they can transact with the “currency” of their belief.
This currency might take the form of gold or dollars or Bitcoin or CryptoKitties or whatever.
Each has very different properties, but they’re all backed by the same thing:
A story that the holder believes in.
Okay, so… why does any of this matter for people like us?
If the value of something as tangible as a dollar bill is based on a subjective belief in a story, then just imagine how important it must be to provide a clear and compelling narrative about the value that your totally-intangible-by-comparison services could provide to your target market.
What story are you telling people to help them value what you do?
PS – Need help telling a compelling story about your value? That’s what I help with. Schedule a discovery call and let’s chat.
This post was originally sent as an email to the Magic Words of the Week newsletter list. Every week, I share reflections on a word, quote, or phrase I think will help you thrive in your life’s work.