Captain’s log, stardate 20200518
Sent by Jonathan Stark on May 18th, 2020
My daughter likes to take her baths in cold water.
Well, I think it’s cold... she thinks it’s perfect.
Out of curiosity after her bath last night, I stuck one of my wife’s cooking thermometers into her “perfect” temperature water and it turned out to be 85ºF.
Objective vs Subjective
85ºF is an objective measure. No matter who was holding the thermometer - whether it be Winston Churchill or Rosa Parks or Jimi Hendrix or Catherine the Great - the thermometer would have reported 85ºF as the water temperature. The temperature of water is objectively true. In other words, the person taking the measurement (i.e., the subject) has no effect on the measurement.
My daughter thinking the water temperature was “perfect” and me thinking it was “too cold” are subjective measures. If I jammed Winston Churchill and Rosa Parks and Jimi Hendrix and Catherine the Great into my upstairs bathroom and they all stuck a finger in the tub, I wouldn’t be a bit surprised to get a different description of the temperature from each of them - way too warm, a little too warm, just right, a little too cold, way too cold, or whatever. These are all different measures, and yet they can all be subjectively true at the same time.
Both objective and subjective measurements can be perfectly valid. One is not necessarily “more right” than the other. Which to use depends on the situation.
Here’s the thing...
Understanding the difference between objective and subjective measurements is critically important when it comes to pricing your products and services.
Price is an objective measure. Let’s say Bob parks his 1976 Chevy Camaro out on the front lawn with a big sign that says “FOR SALE $995”. The price for Bob’s car is $995. It’s objectively true. Anyone walking by could tell you the price.
Value, on the other hand, is a subjective measure. Anyone walking by would probably give you a different answer to the question, “How much would you pay for that car?” Whether Bob’s car is worth $995 to someone depends on their situation. If someone feels that Bob’s car is only worth $200, that’s their subjective measure and it’s perfectly accurate and true.
Price is a objective property of a thing that is for sale. Value is not. Value doesn’t exist in the thing for sale, it exists in the mind of the buyer.
Pounding your chest and proclaiming to a prospect that your service is worth more than they think is just as silly as me trying to convince my daughter that a 105ºF bath is what she’d prefer.
If you want to set an ACCEPTABLE price, it MUST be lower than the VALUE in the mind of the buyer. Otherwise, no sale will take place.