We have often heard: Singaporeans know the COSTS of everything but do not know the VALUE of anything.
This is a criticism of our small mindedness and small businesses. What then is the meaning of VALUE? There is no easy answer, but most experts will agree that value must be the maximum price a customer will pay for an item or service.This begs the next question: What more can we add to the product/ service to make a customer be willing to pay more?
Research has shown that customers will be willing to pay more for an item/ service for any one or combination of reasons, but not exclusively limited to these reasons:
A) If the item or service is perceived as the highest quality or best in class
B) If the item or service addresses the needs of the customer most precisely
C) If the item or service offers the most time saving and fastest delivery
D) If the production of the item or service is cost effective, that it offers the customer the best resale value.
If our national objective is to drive the capability and productivity of our small businesses, we must each learn to negotiate better contractual terms, which incorporates the values a customer is willing to pay for and not merely negotiate terms based on offering the lowest price in the market.
Which do you think is a more profitable and more productive company? The Chinese manufacturing company selling USD 10 per shoe it makes to Nike or Nike selling to the market the same pair of shoes for USD 100?
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