Value

Reading this post at Navinot (Indonesian) and this one from Nindya sent flashbacks of business school to my head.

Perceived value is more important than real value. It’s what gets people to buy. Or not buy for that matter. Otherwise why would someone pay so much to fly first class? First class may offer better service than coach, or economy but think about it. Is it really worth the price just because that’s how much they charge for it? How do you monetize the term first class vs business class, vs economy class? How do you know they’re not actually overcharging you? Some even have exceptional economy class service that exceeds that of other airlines’ business class. The brand of the service or product also plays part in determining value.

Apple to some, is arguably one of the biggest offenders in this regard. An iPhone 3G is made up of components costing less than US$300 according to iSupply but a fully unlocked 8GB iPhone 3G costs about US$600 direct from the telcos that do sell unlocked or $700 direct from Apple in Hong Kong. In the US, if you sign up for an iPhone you end up paying in excess of $1800 over the life of the contract (2 years).

Is the Mighty Mouse worth $70? Probably not more than $50. iPods are in general more expensive than their competitors’ but should they be really that much more expensive or are they a bargain? Being able to easily manage music in them via iTunes and other iPod software capabilities add more to value but it’s difficult to be expressed in monetary terms.

And then there’s the Macs themselves. Are they really priced at premiums? Majority of perceptions say yes but perhaps not necessarily. Further to that point, the integration of Mac OS X itself with the hardware as well as across Apple’s other software line up such as iWork, iTunes, iLife, Final Cut or Logic series, and the general stability and seecurity of Mac OS X over XP and Vista present the Mac with an even higher intrinsic and perceived value which makes the seemingly premium price now a bargain.

Ticket price or printed price may be absolute but the value of the product is certainly relative to the eye (and mind) of the buyer.