What is the relationship between price, value and costs?

Price, value and costs are not three isolated terms. There is an relationship between this three definitions.

Price is the amount of money paid for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.

Cost is what we pay for what we have bought over time. In other words, buy a cheap car and therefore you will have bigger service bills and inconvenience in the next years. You have a higher cost over time than the lower price you paid.

When you start a survey and ask consumers for their demands, what do you think will they answer you? Firstly, low price for the product or service, but is this the true need? No, what consumers really expect are low costs.

Therefore, it seems that, we only need to question prospects better on what they really want and define for them in terms of our product or service the difference. What we are talking about here is value to the customer. And value is always ‘perceived value. Every prospect interprets value in his own terms.

Customer don’t want a cheap product or service, they want value. They don’t really want things that rust, break, are inconvenient or difficult to understand. People want products and services which helps them to make their life easier, less complicated, less stressful, happier and more fun.

If a product or service satisfies this demands from the people than the price of the product will not be the most important aspect for the customer.

Sources:

http://ezinearticles.com/?The-Price,-Cost-Value-Relationship&id=321066

http://www.cval.com/glossary.htm