Learning to separate value from cost

Learning to separate value from cost.

spent three years at the Copenhagen Business School to largely acquire
one skill: The ability to price something at its value, not cost, and
feel damn good about it. It sounds trivial, but it can be the hardest
thing. Russell Beattie gives you the guilt version:

Let me make an aside for a moment and say that I’m
always fascinated by what I call “natural business people.” These are
the folks that have absolutely no problem making money. If I buy
something for $2, I have this vague sense of guilt when I turn around
and try to sell it for $4, and even worse if I sell it for $6. It may
be worth $6 now, but I know how much I bought it for and I feel bad.
People like Bill Gates for example, don’t have this problem (remember
the story of QDOS as the prototypical example).

The inability to price at value instead of cost is what separates
nice (or niche) businesses from great businesses, what fizzles good
ideas, and what turns would-be entrepreneurs into “starved artists”.

But its also something that separates people at a moral level.
People who charge at value are often labeled as cynical or price
gaugers or downright inhuman. It creates a false split between “the
compassionate” and “the cold business people”. It's probably also one
of the prime puzzles for economists: Why is this so hard for “normal
people” to understand?

I won't attempt to pontificate on why, but I will say that
the three years was well worth it. Not only as a way of conducting
business, but as a way of developing projects and products (even living
life, to be grand!). In some ways, I think its my most important skill
and asset for programming. The ability to discern value and make calls
based on it: Worth it?

This is naturally what attracts me to simple problems. What's the
least amount of work I can do that ends up having big value? Before
I've cleared all the simple problems of high value, it's just not for
me to engage in solving hard problems. Too much risk, not enough ratio.

(Oh, and just to satisfy Russell: If you're not using Ruby on
Rails for your start-up, it's going to fail. No buts, no discussion.
Fail. Hear?)
  [Loud Thinking]

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