Darren Herman

This post is inspired by Fred Wilson’s recent post entitled, Does Price Matter.  When you purchase a product or service, it has a price tag associated with it.  That price tag is based on what the seller wants to make (cost + profit) based on what they think they could sell to their anticipated target market.

Traditional “price” for products/services though in itself is flawed, IMHO.  It only takes into account one side of the equation:  the seller.  There are a few promotions such as the recent one done by apparel seller Uniqlo but most [private] pricing is determined by the seller. And for financial instruments, an open market determines the cost:  NASDAQ and NYSE are examples for that.

There were a few websites back in the day such as Mercata (shut down in 2001) that allowed groups of users to purchase based on the demand that they have and almost dictate market pricing.   I’d imagine this type of service is coming back in some form or another:  the more people buy, the lower the price becomes.

I’d argue that price does not always reflect value.  Value is generally what you will receive once you actually buy something:  and that value should be at or better than the price that you paid for it or you will most likely look at your transaction with negative taste.

People say that paying >$4 for a cup of coffee is expensive.  While pricing sounds expensive, what is the value to me?  If that $4 cup of coffee allows me to sit at a table, read the NY Times or WSJ and answer emails early in the AM, the valued delivered is much more… at least to me.