November 1, 2019

Sour Patch Kids vs Hershey Bar Minis

Last night, I took my kids trick or treating.

When we got home, they dumped their loot out on the living room floor to take inventory of their haul.

Once they saw what candy they had each received, they spontaneously started trading Hershey Bar Minis for Sour Patch Kids.

Why?

Because my 6yo prefers plain chocolate candy and my 9yo prefers fruit-flavored gummy stuff.

Their preferences are not based on how much money the candy cost to buy in the store, nor how much the candy cost the manufacturer to produce.

Each kid just prefers one flavor over the other.

Fortunately for them, they have different taste which causes them to value each candy differently.

One kid assigns a low value to chocolate and a high value to gummies.

The other kid assigns a low value to gummies and a high value to chocolate.

Neither kid is wrong... value is subjective.

Now here’s where the magic happens...

When the kids traded chocolate for gummies, both of them made a profit.

In other words, both kids were better off after the trade. They both traded something of low value (to them) for something of high value (to them).

This is called “mutual profit” and it’s critical to understand for value pricing.

Here’s the thing...

If a client gives you $50,000 to build them a Wordpress website, they aren’t really BUYING the website from you so much as they are TRADING the money for the website.

So...

Just like two kids trading Sour Patch Kids for Hershey Bar Minis, (ideally) both you and the client will be better off after the trade

i.e., The client is happier with the website than the money, and you are happier with the money than the time it took you to build the website.

The seller is not the only one who profits. The profit is mutual. It’s a win win.

Yours,

—J

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